USD30m loan for TNM

By Gregory Gondwe, Lilongwe, Malawi

Telekom Networks Malawi Limited (TNM) says a Malawi Kwacha denominated syndicated term loan arrangement for the equivalent of USD 30 million will greatly improve the net working capital position of the company.

The loan, sourced to finance capital expenditure and refinanced short term vendor credit facilities, has been highlighted in the company’s report on ‘results for the year ended 31 December 2011’ published at the weekend.

 TNM, the first mobile phone service provider in Malawi, has also announced through the report that it has registered a 35% growth in subscriber base.

As of last year the company was boasting a subscriber base of slightly over two million users for both its post and pre paid services.

The report, signed by the company’s Chairperson Prof. Mathews Chikaonda and his vice Hiteshi Anadkat, also claims it has increased its market share to 42% from 37% within the same period a year before.

On its key financial highlights within the same period, the company says it has registered 24% growth in service revenue to K12, 255m.

Prof. Chikaonda and Anadkat say the company maintained its growth momentum in 2011 and registered a significant increase in service revenue of 24% which is different from 20% of 2010.

They also say Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased by 29% unlike 25% registered in 2010.

Prof. Chikaonda and Anadkat also say although, due to significant network expansion, depreciation increase to K2, 169 m a departure from K1, 611 m of 2010, and finance charges have escalated, net profit increased by 16% unlike that of 2010 which was -3%.

TNM's statement also shows that profit for the year under review is K1.3 billion up from K1.1 billion recorded in 2010.

“The encouraging results for the year are supported by positive indications from the market which show an increasing consumer preference for TNM services,” the two gurus say.

Total dividends of MK702.8 million (MK0.07 per share) are proposed for the period ended 31 December 2011, which represents 52% of the net profit for the year:-

Prof. Chikaonda and Anadkat also say the company has proposed total dividends of K702.8 million or 7 tambala per share for the period ended December 31, 2011 representing 52% of the net profit for the year.

Directors proposed a final dividend of 3 tambala per share out of the company's profits which would be declared at TNM's forthcoming annual general meeting.

Since its incorporation TNM says it has achieved various milestones which includes its launch on 15 December 1995 with 36 base transceiver stations covering Blantyre, Lilongwe, Mzuzu and Zomba, becoming the third largest network in Southern Africa after South Africa’s MTN and Vodacom.

The other milestone is when it started commercial operations in January 1996 offering post-paid services with a capacity of 7,000 subscribers. In the same year capacity was increased to 10,000 subscribers.

By June 2000 the company says it launched pre-paid services before following up with SMS services in January 2001 and international roaming in 2002.

In April 2005 TNM recorded 100,000 customers followed by a rebranding process in June 2007 with a brand promise – ‘always with you’.

In October 2008 TNM commissioned Next-generation network (NGN) replacing the legacy switch and was followed by introduction of GPRS/EDGE.

In November of the same year, TNM successfully raised MK2.58bn in new capital and listed on the Malawi Stock Exchange (MSE) and significantly expanded its service offerings and as of Wednesday last week TNM shares were trading at K1.71 each at the MSE.

In December 2009 TNM became the first mobile phone operator to launch 3.5G technology in Malawi which buoyed it to register a subscriber growth to a million in 2010.

Prof. Chikaonda and Anadkat say the prevailing challenging macro-economic environment will continue to provide obstacles to sustained business performance.

“Major delays in investment in the network, due to limited access to foreign exchange, may result in strain on the network and impact on quality,” they said.

They however, said the encouraging trend in the demand for data is projected to further increase, but the service quality may be limited by the lack of quality international connectivity for Malawi as a country.

“We remain committed to delivering our promise to our customers of quality service and being an agent for economic growth of the country,” said Prof. Chikaonda and Anadkat.

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