The MTN Group yesterday announced its annual results for the year ended 31 December 2015. The results reflect the difficult operating environment the business experienced during the period under review.
The Nigerian operation in particular experienced a very challenging year. Weak economic conditions and the limited availability of US dollars contributed to a lower-than-expected performance. Heightened regulatory pressure also severely impacted MTN Nigeria.
This was particularly evident in the suspension of regulatory services and the subscriber registration requirements, which meant that MTN had to disconnect 6.7 million subscribers. MTN Nigeria is working hard to complete the registration process in line with the NCC’s requirements.
On 24 February, MTN Nigeria made a without prejudice good faith payment of N50 billion (approx. US$ 250 million) to the Federal Government of Nigeria in relation to the NCC fine relating to the late disconnection of subscribers, on the basis that this would be applied towards a settlement.
MTN Nigeria also agreed to withdraw the matter from the Federal High Court. While negotiations with the regulatory authorities are on-going, for the purposes of this results announcement, MTN Nigeria recorded a R9 287 million provision for the fine at the end of the reporting period, negatively impacting the Group EBITDA by 13,6% and HEPS by 402 cents*.
Commenting on the provision, MTN Group Executive Chairman, Phuthuma Nhleko said: “MTN’s auditors have required that the company make a provision in line with the International Financial Reporting Standards (IFRS). Discussions with the Nigerian authorities continue on the matter.”
Meanwhile, the management of MTN Nigeria has clarifed that the R9287 million set aside in the recently released MTN Group Financial results is in accordance with the Principle of Prudence in generally accepted accounting standards. This requires that reasonable provisions be made for contingent liabilities.
The company said discussions with the Nigerian authorities are still on-going and that stakeholders will be advised accordingly when a settlement is reached.
MTN Executive, Amina Oyagbola said: “MTN’s auditors have required that the company make a provision in line with the International Financial Reporting Standards (IFRS).”
In the period under review, MTN Nigeria invested US$94 million in renewing its 2G licenses. It also concluded the acquisition of Visafone Communications. These developments, combined with the acquisition of a 4G/LTE licence and digital TV spectrum, highlight MTN’s long term commitment to improving the quality of Broadband services, a national priority for the government.
Ferdi Moolman, CEO of MTN Nigeria said: “We have invested more than US$16 billion in Nigeria over the past 15 years and contribute an estimated 4.5% to GDP. We are proud of the fact that we are an integral part of the Nigerian economic and social fabric.
We remain committed to the country and our top priorities are to improve network and service quality, as well as data speeds for our customers. Compliance with regulatory requirements also remains a focus. Although subscriber registration is highly complex given limited national identity databases and personal documentation, we remain committed to registering subscribers with the use of improved systems and processes.”
In line with the Group’s vision of “leading the delivery of a Bold, New Digital World to customers,” MTN continues to invest in digital services, ranging from e-commerce to digital media and mobile financial and lifestyle services.
MTN Nigeria is the largest music distributor in Africa and its investments in Mobile Money and Africa Internet Holdings (which houses well-known brands like online retailer, Jumia and real estate player, Lamudi) provide an exciting platform for the next phase of evolution of the mobile telecoms sector.
Moolman concluded: “We have put in place the operating and management structures, as well as made critical investments, to ensure that we improve our competitiveness in 2016. MTN is an enabler of socio economic growth in Nigeria. Our infrastructure supports critical sectors of the economy, from financial services to oil & gas and commerce. We remain committed to Nigeria and will continue to invest in the country through our operations and the MTN Foundation.”
The MTN Foundation— which has invested N18 billion in 550 projects and empowered more than 3 million people in communities across Nigeria since its inception –continues to focus on sustainable projects in three key areas, namely health, education and economic empowerment.
MTN donated US$10 million in Ebola awareness during the year.