MTN earmarks USD1.583bn for Nigeria

By Kokumo Goodie, Lagos, Nigeria

Telecommunications firm MTN Nigeria says it will spend USD1.583 billion in growing its infrastructure in Nigeria this year, promising that more base transmission stations (BTS) will be built to change customer experience on the network.

Akinwale Goodluck, corporate services executive, MTN Nigeria, said of the R28 billion earmarked for capital expenditure (capex) for the Group’s 22 countries of operations the year, a slightly less than 50% (R13 billion) of that amount will come to Nigeria.

According to the MTN Group financial report, after a challenging year, Nigeria reported a decline in EBITDA of 6,2%.

According to the telco’s results for the year ended 31 December 2012, total revenue grew by 7,1% to R41,4 billion (about N716 billion) from R38,6 billion (about N668.1 billion) in the previous year. “After a challenging year, Nigeria reported a decline in EBITDA of 6,2%,” MTN lamented.

Earnings Before Interest, Taxes, Depreciation and Amortization or EBITDA is an approximate measure of a company's operating cash flow based on data from the company's income statement and is always calculated by looking at earnings before the deduction of interest expenses, taxes, depreciation, and amortization.

Goodluck blamed the fall in financial contribution from Nigeria to the MTN Group to about 30% decrease in tariffs in the country, occasioned by the display of exuberance by the operators.

According to him, the many freebies that were extended to the subscribers on the network led to the erosion of value from the industry.

He commended the regulator of the industry, the Nigerian Communications Commission (NCC) for stepping in when it did to stop promotion and lotteries on the network, adding that MTN, as a business organisation, takes the interests of its customers seriously. “As a business, we have taken steps to ensure that the interest of our subscribers are protected by not sacrificing quality service on the altar of customer acquisition,” he said.

The Group's allocation to its Nigerian operation for 2013 is the highest in all its over 20 countries of operations.

Next to MTN Nigeria in the capital expenditure allocation is South Africa, followed by Iran with 5 billion Rand and less than 2 billion Rand respectively.

He said the USD1.5 billion allocation to MTN Nigeria represents slightly less than 50% of the Group's Capex.

Goodluck, who recalled that USD1.3 billion was used as Capex for MTN Nigeria in 2012, said Nigeria is still favoured in the current year with by taking the lion share of the Group's total capital expenditure.

According to him, the current USD1.5 billion is directed at network expansion such as the building more base stations and fibre transmissions across the country.

He said the fresh investment will allow the over 45 million telecoms subscribers on MTN Nigeria's network to enjoy improved access voice and data services with better coverage.

According to him, MTN Nigeria did not only fully capitalise its USD1.3 billion Capex for 2012 but also used the USD300 million carry-over Capex  for 2011 to embark on its soon-to-be-completed network modernisation and swapping exercise which began early last year.

Specifically, Goodluck said the telecom firm, which currently has about 9, 000 sites across the country, will build and upgrade addition 5, 000 base stations on its 2G network and about 4, 000 sites on 3G network.

"Looking at MTN Nigeria, we continue to grow our voice network and also grow our data business at 100% rate annually. The data business is going to be a lot more significant than voice.

"We're seeing an increase in demand for data services and that informs the investment that we are putting in on 3G data networks. Voice is king. Data is a very ambitious prince but still a boy," he said.

MTN Group results for the year ended 31 December 2012 reflect solid progress in growing subscribers, revenue and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).

Highlights of the results show that Group subscribers increased 15.1% to R189.3 million∙ Revenue increased 10.9% to R135,112 million∙and data revenues increased 58.5% to R14,574 million.∙       

EBITDA increased 7.0% to R58 564 million,∙ EBITDA margin was stable at 42.9% and∙ Capex of R30 101 million positions the Group for continued growth.∙ 

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