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MTNN Q2'20: Interim Dividend Is Justified By Robust Cashflow
N3.50/Share Interim Dividend Is Justified By Robust Cashflow In Q2'20

Cardinalstone Research
MTN Nigeria Plc (MTNN: TP - N149.36 : BUY) reported a 13.8% YoY contraction in profit after tax to N43.7 billion in its Q2’20 results. This result and the strong first-quarter performance translate to a 4.7% contraction in earnings to N94.9 billion over the first six months of the year. Given the gradual easing of restrictive measures, we believe the company is well on course to meet our full-year profit forecast of N201.1 billion
  • Revenue increased by 8.4% YoY to N308.9 billion in the second quarter due to strong growths in data traffic and usage as well as a relatively milder traction in voice revenue. The company also reported an increase in Mobile subscribers during the review quarter 
  • EBITDA margin contracted by 4.8pps YoY to 49.7% in the review quarter due to a combination of naira depreciation, higher value-added taxes, and the cost incurred to undertake COVID-19 response initiatives 
  • Net finance cost increased by 13.3% to N33.0 billion on higher short term borrowings (over five-fold increase from last full-year level) 
  • MTNN reported an 18.7% YoY increase in capital expenditure (including right of use assets) in H1’20
  • Operating cash flow rose by 24.2% to N326.5 billion in the first half of 2020. Aided by marginal growth in free cash flow (+1.9% to N193.0 billion), management declared an interim dividend of N3.50 per share for the half-year (vs N2.95 in the corresponding period of 2019). This dividend decision is likely to endear some investors to the stock in coming trading sessions
  • MTNN will be hosting a results conference call on Tuesday, 04 August 2020. Please click here to register for the call.

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