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TNM consolidates growth, increases profitability

Malawi Stock Exchange-listed integrated mobile network and ICT service provider Telekom Network Malawi (TNM), growth and business consolidation has achieved traction with 2016 performance beating that of 2015 in key respects of profitability, customer growth and cost containment.

The company’s results for FY ended December 31, 2016 show a jump in net profit after tax by 52 percent at K8.2 billion, up from K5.4 billion. They show that investment in the 4G/LTE network platform and an increase in customer touch points is starting to yield the desired results as the company’s subscriber base increased by 13%. Consequently, service revenue grew by 31% to 64.6 billion while EBTIDA was maintained at 35%.

TNM will pay its shareholders a total dividend of K3.3 billion at 33 tambala per share, up from 30 tambala in 2015.

During the period under review, TNM investment in network operations and upgrades was K9.1 billion down from K12 billion in 2015. The investment comprised mainly of capital expenditure for the 4G/LTE roll-out, Lilongwe and Blantyre capacity and coverage expansion, fixed broadband and mobile broadband technology, and various other technology upgrades in the unified communications space.

TNM also grew its distribution network as number of shops and vending points increased to 25 and 104, respectively. Other strides by the network included establishment of an Enterprise Business Unit to support ICT growth and dedicated products for enterprise customers.

Said Chairman Mathews Chikaonda and CEO Douglas Stevenson in a joint statement; “Despite the challenging economic environment, the company has been successful with initiatives taken to improve its revenue streams and cost management projects, which resulted in an EBITDA margin maintained at 35% in 2016 (2015: 35%).”

The joint statement says that although current levels of profitability are encouraging, TNM requires a significant higher level of profitability to ensure the sustainability of future investment in infrastructure expansion projects and the upgrade of its technology, as well as further coverage expansion.

It forecasts the macro-economic to remain challenging and put pressure on margins and service revenue. “Management will continue to pursue cost efficiencies to protect margins. The company continues to pursue its stated strategy to become the preferred ICT provider in Malawi through focus on improved customer experience and product innovation,” reads the joint statement.