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MTN Group repatriates $280m dividend from Nigeria

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South Africa’s MTN Group has repatriated its last year’s dividend of $280 million (R4.2 billion) from its local unit in Nigeria.
The company reported the payout recently during the release of preliminary financial results for six months to June 30, 2021.

The funds from Nigeria are part of approximately $650 million (R9.3 billion) in cash the pan-African telecoms giant returned from its subsidiaries.

MTN had been struggling to get dividends out of its subsidiaries due to the challenges of securing foreign currency in Nigeria and some other markets where it operates.

As a result, MTN was forced to suspend dividend payout for the 2020 financial year. The company also cited other reasons for the suspension, such as the timing of proceeds from an ongoing asset realisation programme (ARP) and the impact of the Covid-19 pandemic.

“Cash upstreaming from Nigeria remained challenging in terms of securing foreign currency in the market. During 2020, we upstreamed the equivalent of approximately R286 million from Nigeria, with approximately R4.2 billion yet to be repatriated as of 31 December 2020,” the company had said in March.

The group has now fully secured its cash dividend from Nigeria, in what is one of the two positive developments concerning MTN that will come as a relief to shareholders.

The group’s complete half-year results are expected to be released on August 12 and it has told investors to expect between 75 per cent to 85 per cent drop in profit or earnings per share (EPS). This is due to an impairment charge involving its Yemeni business and the decoupling of its operation in Syria.

The sale of MTN Group’s 75 per cent stake in MTN Syria is part of ongoing attempts to exit markets in the Middle East over the next three to five years, with a plan to fully focus on core African markets.

MTN plans to raise about R15 billion ($1 billion) from shareholding sales in markets outside Africa, proceeds which will be used to reduce its huge debt of nearly R50 billion ($3.5 billion) for the year to December 2020 as well as allocate more capital investments in Africa by 2025.

In Nigeria, MTN, through its local unit, has earmarked N600 billion ($1.5 billion) over the next three years to expand broadband access in the country.

For MTN Nigeria, half-year 2021 results show that service revenue increased by 24.1 percent year-on-year, despite the number of its mobile subscribers declining by 7.6 million (nearly 10%).

“Operationally, our mobile subscribers closed H1 at 68.9 million, down 9.9% from December 2020. This was due to the regulatory restrictions on new SIM sales and activations, which was lifted on 19 April 2021,” MTN Nigeria’s CEO, Karl Toriola, said on an analyst call.

While user numbers fell, MTN Nigeria company managed to increase service revenue to N790.3 billion (about R27 billion, $1.9 billion) driven by a surge in data usage.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 27.6 per cent to N417.2 billion ($1 billion) while transaction volume for mobile money increased by 280.8per cent year-on-year to 55.6 million. Its total MoMo active subscribers reached 6.1 million,” the financial statement said.

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BUSINESS

Dangote seeks loans for Lagos giant refinery as costs balloon to $19B

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President of Dangote Group, Aliko Dangote is in talks with some of the world’s biggest oil traders to help finance his mega refinery project in Lekki, Lagos, Reuters has reported quoting close sources to the project.

The 650,000 barrel-per-day refinery, once complete, will be the continent’s largest plant and redraw major trade flows of crude and fuel in the Atlantic basin.

The refinery has been delayed by several years and the cost has ballooned to $19 billion from Dangote’s earlier estimates of $12-14 billion.

Construction was also delayed due to COVID-19 outbreaks among workers at the site and delays getting materials, two sources with knowledge of the project said.

Many industry sources do not expect any products before the second half of next year.

Hit by economic consequences of the COVID-19 pandemic and soaring construction costs, Dangote needs a cash injection.

Nigeria’s state oil firm NNPC has agreed to buy a 20% stake in the refinery for about $2.8 billion but Dangote is looking for outside cash.

NNPC’s head Mele Kyari said a process was on-going to raise $1 billion with Afreximbank to fund part of its stake purchase.

The billionaire has held talks as recently as a month ago with executives from the world’s top two oil traders – Trafigura and Vitol.

Trafigura and Vitol declined to comment. A spokesperson for the Dangote Group did not respond to multiple requests for comment.

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No plan to convert domiciliary accounts into naira

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The Central Bank of Nigeria (CBN) has denied a claim that it directed banks to convert all customers’ domiciliary accounts meant for dollar and other hard currency transactions into naira accounts.

In a statement on Saturday, Director, Corporate Communications, Osita Nwanisobi, the apex bank said a fake circular with a fake CBN logo curiously dated “13 September 2021” (next Monday), and purportedly issued by its Trade and Exchange Department directed that all Deposit Money Banks, International Money Transfer Operators (IMTOs) and members of the public are to convert domiciliary account holdings into naira.

“We wish to reiterate that the Bank has not contemplated, and will never contemplate, any such line of action. The speculation is a completely false narrative aimed at triggering panic in the foreign exchange market,” CBN said.

The apex bank recalled that it had assured that there was no plan to convert the foreign exchange in the domiciliary accounts of customers into Naira in order to check the alleged shortage of availability of the United States Dollar (USD).

“Operators of domiciliary accounts and other members of the banking public are therefore advised to completely disregard these fictitious documents and malicious rumours, and go about their legitimate foreign exchange transactions.”

The apex bank also warned corporate bodies and members of the public against the unauthorised use of the bank’s logo for any purpose, stating that the appropriate authorities have been notified and culprits will be sanctioned.

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NNPC’s assets rise by 18.7%

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For the third time since it was established 44 years ago, the Nigerian National Petroleum Corporation (NNPC) yesterday officially released its Audited Financial Statement (AFS) for year 2020.

With the development, the corporation has now joined other state-owned global oil concerns that publish the details of their operations, to among others, boost investors’ confidence and enhance business transparency.

President Muhammadu Buhari last month announced a profit after tax (PAT) of N287 billion for the NNPC for the financial year ended 2020 and had directed the corporation to ensure prompt publication of its AFS in line with the requirements of the law.

The latest financial statement of the national oil company showed that aside the already announced PAT, from a loss position of N1.7 billion in 2019, to N287 billion in 2020, NNPC’s total current assets increased by 18.7 per cent compared with that of 2019, while its total current liabilities increased by 11.4 per cent within the same period.

In addition, the group’s working capital remained below the line at N4.56 trillion in 2020, as against N4.44 trillion in 2019, while the corporation’s group revenue for the 2020 financial year stood at N3.718 trillion as against N4.634 trillion in 2019.

According to the national oil company, the decrease in the group’s revenue could be attributed to the decline in production and price of crude oil due to global impact of Covid-19.

The corporation first published its AFS last year, the first being for 2018 and the second dealing was on its activities for 2019.

But the NNPC’s independent auditors, namely PriceWaterhouse Coopers (PwC), SIAO Partners and Muhtari Dangana & Co, drew attention to a section of the document which indicated that the corporation’s liabilities still outstripped its assets.

The auditors stressed that though the NNPC announced a profit of N287 billion, but the large discrepancy between assets and liabilities cast some uncertainty on the corporation’s operations.

“We draw attention to note 42 of the consolidated and separate financial statements, which indicates that the group recorded a net profit of N287.2 billion (Corporation: N235.3 billion) during the year ended 31 December 2020 and, as at that date, the group’s current liabilities exceeded its current assets by N4.6 trillion (Corporation: N729.1 billion).

“As stated in note 42, these events or conditions, along with other matters as set forth in note 42, indicate that a material uncertainty exists that may cast significant doubt on the group and corporation’s ability to continue as a going concern. Our opinion is not modified in respect of this matter,” they noted.

The newly released AFS also indicated that the NNPC recorded a profit before tax of N719 billion in 2020, compared with N93 billion loss in 2019, and a total comprehensive income of N655 billion compared to a loss of N20.1 billion last year.

The financial statement was signed by the Group Managing Director of the corporation and the Chief Financial Officer, Mallam Mele Kyari and Mr Umar Ajiya respectively and was dated September 3.

However, despite their misgivings, the auditors stated that records showed an improvement from prior year based on several group improvement efforts put in place by management, including elimination of the cost drivers responsible for the accumulation of the shortfalls in settling domestic crude obligation to Federation Account.

The auditors further acknowledged the introduction of the Price Modulator mechanism in the Petroleum Products Pricing Regulatory Agency (PPPRA) template designed to eliminate the major cause of the losses as well as minimising the breaches to pipeline networks.

Under the Petroleum Industry Act (PIA), they projected that the NNPC when given the autonomy, would operate profitably, noting that the recapitalisation of the corporation would enable the resolution of all outstanding related party payables and receivables to enable NNPC start on a clean slate.

Kyari had while explaining how the NNPC arrived at the profit, attributed it to aggressive cost cutting, automation of the NNPC system and renegotiation of contracts downwards by about 30 per cent, among other tough measures.

During the year, the NNPC said it donated a total sum of N3.6 billion and N9 million respectively to various charitable organisations, higher education institutions and other organisation, while no donation was made to any political party.

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