Africa-Press – Angola. Gone are the days when Unitel was one of the most profitable companies in the country. In 2023, Unitel saw its operating results plummet, one year after being nationalized by the State. Increased operating costs, due to investments made a year earlier, were at the root of the collapse. However, profits actually grew by 2%, mainly thanks to the increase in dividend distribution from BFA.
Unitel’s operating results fell 82% to Kz 8.1 billion (around USD 9.8 million at the end-of-period exchange rate) in 2023, according to calculations by Expansão based on the mobile operator’s report and accounts, published by the State Asset and Participation Management Institute (IGAPE). What was once one of the most profitable companies in the country sees its results plummet a year after being nationalized by the State. The operator, which for many years had a monopoly on telecommunications, has been losing market share with the entry of Africell on the scene.
In practical terms, a company’s operating result is the profit generated from its main activities, minus operating expenses. It is a measure of an organization’s efficiency and ability to generate profit from its core operations. Thus, in the 2023 financial year, Unitel recorded a 2% growth in operating income (mainly the provision of telecommunications services and sales), which, compared to the 14% growth in operating costs, was the basis for the public telecommunications operator’s slump in results.
According to Unitel’s 2023 report and accounts, the increases in operating costs are essentially the result of increases in amortizations, from Kz 46.6 billion in 2022 to Kz 72.1 billion last year, and the growth of “other operating costs and losses”, which went from Kz 114.9 billion to Kz 138.8 billion in 2023. Regarding amortizations, the company justifies them with investments made in 2022 that began to be paid in 2023. As for “other operating costs and losses”, these are mainly the increase in costs in subcontracts, that is, “costs for preventive and corrective maintenance of the telecommunications network and support platforms”, costs incurred with interconnection traffic, and costs for the rental of transmission circuits contracted from Angola Cables, Angola Telecom, Infrasat, Mercury and Meo, as well as costs related to call center services. This is how Unitel justifies the 22 billion Kz increase in operating costs.
However, in a year in which the number of employees fell from 3,120 to 3,088, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), a financial indicator widely used to evaluate companies and make investment decisions, also fell. The mobile operator recorded an EBITDA of Kz 80.2 billion (USD 96.8 million) in 2023, compared to Kz 90.7 billion in 2022, representing a drop of 12%. Thus, the EBITDA margin fell by 3.3 percentage points to 22.1%, which means that the company has less capacity to generate resources through its own operating activities.
For Moisés Cambundo, financial manager and researcher, the drop in operating results is worrying and could indicate a series of problems, from management to market competition. “As the literature suggests, if the objective is to understand the pure operating performance and the efficiency of the company in its main activities, the operating result is by far the “shot and fall” barometer for performance, that is, if we look at efficiency without other factors, Unitel is currently less efficient”, he explained.
As for the reduction in EBITDA, Moisés Cambundo says that it is a sign that profitability may be at risk, since for investors this generates uncertainty about the company’s ability to generate returns. “Unitel is not demonstrating a clear trajectory of recovery and innovation, and can be seen as a greater risk, which could make it difficult to attract new investments or carry out an initial public offering (IPO), which is already on the political agenda,” he argued.
BFA saves accounts
Despite the decline in operating results, Unitel recorded a 2% increase in profits to Kz 34.6 billion (around USD 41.8 million). This slight growth is not due to the company’s normal activity, as it fell by 82%. At the base is the increase in financial results supported mainly by dividends received from BFA, as Unitel is the majority shareholder of BFA, with 51.9% of the shares, while BPI, which is controlled by the Spanish Caixabank, holds 48.1% of the bank. Thus, in 2023 Unitel received around Kz 40 billion in dividends from BFA, which obtained the second largest profit in the banking sector in 2023 (Kz 167.9 billion), still around Kz 2.3 billion more than it received in 2022 for its stake in the second largest bank in assets in the national financial system.
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