Legend Internet Nigeria Posts N33 Million in Profit

Legend Internet PLC, a rising player in Nigeria’s competitive internet service industry, has reported a profit of N33 million for the financial period ended April 30, 2025, according to its unaudited financial statements released on the Nigerian Exchange (NGX).

This performance underscores the company’s resilience in a challenging economic environment marked by inflation rates exceeding 33% year-on-year.

As Nigeria’s demand for reliable internet connectivity surges, driven by digital transformation and remote work trends, Legend’s financial results offer insights into its operational efficiency and growth potential.

Revenue Growth

Legend Internet recorded a turnover of N319.9 million for the quarter, a modest 2.2% increase from N313 million in the same period of 2024. The revenue mix highlights the company’s diversified offerings: Legend Subscription services, including fiber, Wi-Fi, and Legend Pay (covering data, airtime, and DSTV subscriptions), contributed N300.2 million, while installation revenue and wholesale bandwidth added N7.2 million and N12.6 million, respectively.

Notably, wholesale bandwidth revenue surged by 184% year-on-year, signaling strong demand for Legend’s infrastructure-sharing services. Over the nine-month period, total revenue reached N962.2 million, up 10.8% from N868.7 million in 2024, reflecting consistent growth.

Profit and Margins

The headline N33 million profit after tax for the quarter represents a significant decline from N72.1 million in Q1 2024, driven by a sharp rise in operating expenses.

Gross profit, however, improved to N214.2 million (from N177.3 million), yielding a robust gross margin of 67%. This improvement stems from a 22% reduction in cost of sales, which dropped to N105.7 million from N135.7 million, primarily due to lower infrastructure costs (N58.1 million vs. N125 million).

However, operating expenses ballooned to N122.6 million, up 164% from N46.4 million, with consultancy services (N35.2 million) and employee costs (N35.8 million) as major contributors. Despite the profit dip, the nine-month profit after tax stood at N221.6 million, a 25.7% increase from N176.3 million, indicating stronger year-to-date performance.

Assets and Liabilities

Legend’s balance sheet reflects a solid asset base of N3.28 billion, predominantly driven by non-current assets like fiber assets (N2.62 billion) and Wi-Fi infrastructure (N111.8 million).

Current assets, including cash and trade receivables, totaled N523.7 million, with trade receivables rising to N377.9 million, suggesting increased credit sales. Liabilities stood at N334.6 million (current) and N2.95 billion (non-current), including a significant N2.14 billion bond, indicating reliance on long-term debt financing.

 The company’s equity grew to N2.95 billion, bolstered by retained earnings of N808.4 million, up from N775.5 million, reflecting the addition of the quarter’s profit.

Cash Flow and Liquidity

Cash flow from operating activities was negative at N4.5 million, pressured by a N111.7 million increase in trade receivables and N21 million in inventory growth. However, financing activities provided a boost, with a N50 million short-term loan contributing to a net cash increase of N41.7 million, resulting in a cash balance of N26.9 million.

This liquidity supports Legend’s ability to manage short-term obligations, though the rise in receivables warrants closer credit risk management.

Market Position and Growth Prospects

Legend Internet operates in a Nigerian telecom market projected to grow as internet penetration rises from 55% in 2025 to over 65% by 2030, driven by demand for high-speed broadband.

The company’s focus on fiber offerings and wholesale bandwidth positions it to capitalize on this trend, particularly in urban centers like Abuja and Niger. However, the 164% surge in operating expenses, particularly in consultancy and staffing, raises concerns about cost control. Legend’s stable pricing strategy, despite inflationary pressures, enhances customer retention but may squeeze margins if costs continue to rise. The reclassification of a N98.46 million deferred tax liability to an asset reflects optimistic tax planning but awaits audit validation, adding a layer of uncertainty.

The company’s market capitalization of N16.5 billion, with a share price of N8.25, suggests investor confidence, though its non-compliance with NGX’s free float requirements may pose governance challenges.

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