Telekom Networks Malawi (TNM), one of Malawi’s two mobile phone service providers has released results for the year ended 31 December, 2010 where it is indicating that it would have achieved more growth if Malawi did not experience intermittent power supply besides its lack of electricity grid in many rural areas.
On a larger picture, the company’s chairperson Dr. Mathews Chikaonda and his deputy Hitesh Anadkat described the company’s performance last year highly.
“The results achieved in 2010 put the company in a strong position to consolidate the gains made in the past years, to increase its position in the market and serve the customers better …,” the statement reads in part.
The TNM which said the 2010 results were good based its assessment on the high growth in the revenue and Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA), which was achieved as a result of the aggressive investment in infrastructure and related marketing activities
The company says it made substantial investment of MK4.538bn in 2009 and this has increased the depreciation charge by MK571 million on the enhanced fixed assets base according to the report.
Dr. Chikaonda and Anadkat explained that the high levels of investment have substantially increased the levels of short term debt which resulted in an increase in borrowing costs by MK273 million. As a result of the increases in depreciation and financing costs the net profit declined from MK1.215bn to MK1.060 bn in 2010.
“The continuing investment in network has enabled the company to retain and register more customers on the network through expanded capacities, extended coverage and new product offering including data services,” the two gentlemen state in the report.
They also say TNM has also added and created network resilience and redundancy for various critical network elements.
However, unlike Airtel Malawi, their competitor TNM says it appreciates the continued goodwill and support received from the market due to their local Malawian roots which they think is spurring the company’s growth.
“The board and management of TNM foresee penetration level of the country further increasing beyond 40 percent in the next few years,” the company hopes.
The company also believes that the higher levels of subsidy on handsets will play a pivotal role in allowing customers to access mobile telephony service.
TNM believes that limited access to foreign exchange which has rocked the Malawi market for some time now, intermittent power supply and lack of electricity grid in many rural areas, are some of the major challenges and obstacles to the business.
“The company is however confident of achieving strong growth as a result of the capital investment made in the last few years, which also provides a sustainable foundation for a long term growth,” the report says.
The report also indicates that total dividends of MK602.4 million (MK0.06 per share) will be declared and paid for the period ending 31 December 2010.