MTN Nigeria Plc experienced a change of direction from moderated interest expenses in the first quarter to a high rise of 52 percent to N50 billion in the second quarter. The increase represents an additional N17.4 billion in interest expenses in the second quarter, which slowed down after tax profit from N97 billion in the first quarter to N84.8 billion in the second.
The telecommunications company’s interim financial report for the half year ended June 2022 shows that sales revenue numbers improved from N471 billion in the first quarter to N479 billion in the second, adding up to N950 billion turnover for the six months of operations.
It is however a slowdown in revenue growth from 22 percent in the first quarter to 18 percent quarter-on-quarter in the second quarter. That still keeps the company on target for a full year turnover expectation in the region of N2 trillion in 2022.
Driven by generally rising interest rates, interest expenses and other rising costs claimed increased proportions of the revenue and weakened net profit margin from 20.6 percent in the first quarter to 17.7 percent in the second.
MTN’s N50bn Interest Expenses Slows Profit In Q2
Interest expenses grew from over N40 billion in the first quarter to N50.6 billion in the second quarter, summing up to N90.7 billion finance cost at half year. Adding to the pressure is a drop of 44 percent in finance income in the second quarter compared to an outstanding growth in the first quarter.
Net finance expenses changed direction from a moderated increase of 18.6 percent to N35.7 billion in the first quarter to a towering growth of 68.4 percent to N48 billion in the second quarter.
Other cost increases that impinged on profit margin in the second quarter include amortization of intangible assets, which multiplied more than five times to N12 billion. Marketing cost rose by 67 percent quarter-on-quarter to N8.3 billion, close to four times the increase of 18 percent in sales revenue for the quarter.
Also, the cost of handsets and accessories advanced more than five times over the same period toN5.9 billion in the second quarter. This reflects the effect of external dependence in a depreciating local currency environment.
Inflation-driven other operating costs also grew well ahead of sales revenue at about 29 percent quarter-on-quarter to N25.5 billion.