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Nigerian shareholders in limbo as MTN pays dividend

South African telecom giant, MTN Group Limited, paid a dividend on the 22nd of April, 2024 with investors receiving ZAR3.30 per share. Despite the economic…

South African telecom giant, MTN Group Limited, paid a dividend on the 22nd of April, 2024 with investors receiving ZAR3.30 per share.

Despite the economic headwinds in the country, the group paid the sum which amounted to N253.41 in Nigerian local currency.

However, it was the lowest dividend payout to shareholders by the group in recent years, down from the annual ZAR8.73 (N670.39).

The MTN Group is described as “an emerging market communication services provider at the forefront of technological and digital innovation with presence in 19 countries in Africa and the Middle East.”

The MTN Group has a total of 294.8m subscribers worldwide with 79.7m of those in Nigeria, meaning that Nigeria has the most MTN subscribers. This also implies that most of the company’s revenue is earned in Nigeria and South Africa.

Though many shareholders reportedly expressed mixed feelings over the shrinking dividend payout by the group, it was generally agreed that paying a little is better than not paying at all.

A glimpse into South African economy

The performance of a company in terms of the turnover, earnings and profits, is a question of the economic condition of the country it is operating.

The South African economy has recently witnessed headwinds attributed to lower commodity prices and structural constraints, according to the finance minister Enoch Godongwana during a recent budget speech.

“To accelerate GDP growth after an extended period of weak economic performance, South Africa needs large‐scale private investment. Government is working to improve the fiscal position, complete structural reforms and bolster the capacity of the state to reduce borrowing costs, raise confidence, increase investment and put the economy on a higher, job‐creating growth path,” said National Treasury in its 2024 budget review.

According to analysts, though South Africa remains the most diverse and sophisticated economy in the continent, it is struggling to overcome recent headwinds which have seen some companies either downscaling production or ceasing production outright.

In the midst of this, the MTN Group, one of the largest companies listed in the Johannesburg Stock Exchange, reported a significant increase in revenue and subscriber rate despite a challenging 2023.

Per the telco, its revenue grew 13.5% to R210 billion ($11 billion), with data revenue making up R84 billion ($4.4 billion) and voice revenue contributing R83 billion ($4.3 billion), and MTN MoMo, its fintech revenue arm, totalling R21 billion ($1.11 billion).

It also experienced a growth of about one-third in the volume of its fintech transactions, reaching 17.6 billion, while the value of transactions across the fintech platform increased to $272 billion.

Daily Trust reports that the group’s financial performance was also hurt by the naira devaluation in Nigeria which saw the giant posting significant loss in forex like other businesses.

According to the group, MTN Nigeria’s operations have been stunted by foreign currency volatility on both its operating and capital expenditure.

It said: “The most significant of these exposures relates to the tower lease costs, the majority of which have a portion indexed to the US dollar but are invoiced and paid in naira.

“The significant movement in the exchange rate had several non-cash impacts on MTN Nigeria’s financial performance.”

Mixed shareholders’ expectations 

This week, MTN Nigeria Communications PLC is holding its Annual General Meeting (AGM), specifically on 16th May, 2024 at the Balmoral Convention Centre, Federal Palace Hotel, amid mixed feelings from shareholders.

Despite the MTN Group, the parent company, paying dividends to its shareholders, the Nigerian shareholders are doubtful of the same privilege as this was not even listed in the businesses and proposals to be ratified during the meeting.

Since its listing in the Nigerian Exchange (NGX), MTN has been paying dividends to its shareholders. From slightly above N8 per ordinary share, it has reduced N5.60k per share amid doubts on whether there would be dividend payout in the previous year.

A shareholder of MTN who spoke with our correspondent on the condition of anonymity said, “As a shareholder with 1050 shares, the last payment I got was in August last year when I received N5,292 on the basis of N5.6 per share. The highest I have got since MTN was listed in the NGX was N13,000 and now I am not sure of what to expect in the coming days because I have checked the annual report and nothing suggests there would be dividend payout during the AGM.”

A former secretary of Independent Shareholders Association of Nigeria (ISAN), Adeleke Adebayo, in a chat with our correspondent said since there’s no declaration of dividends in the second item of the agenda, it means there would be no dividend for the shareholders in the year ended 31st December, 2023.

He said, “We all know the import of the forex problem in the year 2023 accounts which majorly affected people in telecommunications, manufacturing and anybody that has to do with one form of forex issue or the other.”

In the 2023 year, MTN Nigeria recorded a significantly higher net foreign exchange loss of N740.4 billion, an 805% increase over 2022 (N81.8 billion). This culminated in the reported loss after tax of N137.0 billion, compared to a restated profit after tax of N348.7 billion in 2022.

It would be recalled that in June, 2023, the Central Bank of Nigeria (CBN) ended the multiple exchange rate regime and floated the currency which saw the exchange rate increasing from N461.1/US$ in December 2022 to N907.1/US$ in December 2023.

The Chief Financial Officer of MTN, Modupe Kadri, in his statement in the annual report said the exchange rate increase led to “an increase in the average diesel and petrol prices by 66.4% and 257.1% in 2023 to N1,416.8/litre and N600/litre, respectively.”

“In consequence, inflation rose sharply, reaching 28.9% in December 2023 – the highest in 18 years, averaging 24.5% during the year,” he added.

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