Malawi’s TNM takes financial hit from COVID-19
Revenue for Telkom Networks Malawi (TNM) declined by 6% during a difficult 2020 period characterised by COVID-19 disruptions, although data income offered some degree of comfort after strengthening by 17%.
According to a report released by TNM on Saturday, the company experienced the decline despite a 28% surge in mobile money revenues, along with data revenue.
The company said this reflects an increase in use of these platforms, driven by the pandemic.
“Group registered a satisfactory performance despite the unique challenges brought by COVID-19 pandemic,” said George Partridge, chairman of the board of TNM. “The Group focused on preserving the margins and profitability of the business.”
In line with this, operating expenses for the period were maintained in line with prior year levels after the company instituted reductions to its costs relating to distribution and administrative expenses.
Despite the growth in mobile money and data revenue, TNM executives and board are anticipating the “macro-economic environment to remain challenging” and this is expected to exert pressure on service revenue and its margins.
Moreover, a volatile exchange rate and foreign currency scarcity in Malawi will also have an effect on its operational costs.
“We will continue with our business model to minimize these impacts and continue to create value for our stakeholders. TNM has embarked on a recovery plan that will grow the revenues for future profitability,” explained Partridge.
EBITDA for the period under review decreased by 16% owing to the impact of suppressed revenue, and EBITDA margin also took a knock from “a provision on value added tax claim due to different interpretation of tax law” between the company and the Malawi Revenue Authority.
An 8% increase in depreciation expenses “due to increase in capital expenditure” further compounded financial woes.
Shareholders have accused the company of failing to fully inform them of a court case related to its pursuit of listing in 2019.
Moreover, employees at Airtel shops and back offices have also made headlines after alleging the company has failed to make available a medical aid and refused a salary increment.