Legend Internet's Profit Plummets 92% Amid Soaring Costs

Legend Internet Plc (NGX: LEGENDINT) has reported a significant decrease in its pre-tax profit for the year ended July 31, plummeting by 92.35% to ₦13.21 million. This substantial decline is primarily attributed to soaring administrative and financing costs, which overshadowed the company's broadband revenue performance. The company's overall revenue dipped by 7.44% to ₦1.10 billion from ₦1.19 billion in the previous year. Consequently, profit after tax also saw a sharp fall of 90.73% to ₦13.21 million, with earnings per share dropping dramatically from 7 kobo to just 1 kobo.

An analysis of the company’s business segments reveals mixed performance. The core Legend Fibre business experienced a decline in revenue of approximately 17.3%, generating ₦930.20 million. In contrast, wholesale bandwidth revenue surged remarkably by 331.4%, reaching ₦162.58 million. While gross profit fell by 6.23% to ₦714 million, the gross margin improved to 64.76% due to a reduction in the cost of sales.

However, the company's earnings were heavily pressured by a significant rise in expenses. Administrative costs escalated by 88.87% to ₦1.06 billion, notably including ₦355.31 million in professional fees, a substantial increase compared to ₦4.30 million recorded a year earlier. Finance costs also surged dramatically, increasing to ₦314.74 million from ₦28.58 million. These escalating costs resulted in Legend recording a ₦344.05 million operating loss before other income, a stark contrast to the ₦201.24 million operating profit posted in 2025.

Despite the operating loss, Legend Internet managed to remain profitable for the year, largely due to a significant ₦672 million gain from asset disposals. Without this non-recurring income, the company would have reported an overall loss. This highlights a crucial point that the company's current profitability is not derived from its recurring broadband operations.

The company also ended the year with a significantly increased debt burden, with borrowings totaling ₦1.14 billion, a substantial rise from ₦75.23 million a year prior. This figure includes a substantial ₦1.12 billion bridge loan that carries a high annual interest rate of 35% and is scheduled to mature in December. Furthermore, cash reserves plummeted by 71.02% to a mere ₦6.09 million, alongside an operating cash outflow that reached ₦1.14 billion. These figures underscore significant liquidity challenges.

Legend Internet’s shares reflected the company's struggles, closing at ₦4.05 on September 15, having declined by 23.4% in 2026 and approximately 49% below their March high of ₦7.98. While the company’s free float increased to 27.24%, surpassing the Nigerian Exchange Main Board requirement—which may improve trading liquidity—it does not address the fundamental funding issues.

The primary concern for Legend Internet, as highlighted by industry observers, is not just the fall in accounting profit but the critical gap between its operating cash needs and available liquidity. The company's reliance on the ₦672 million asset-disposal gain to report a profit, rather than recurring earnings from broadband operations, is a key challenge. Investors will now closely monitor the company's ability to refinance its high-interest bridge loan, effectively reduce professional and administrative expenses, and demonstrate sustainable cash generation from its wider asset base. The forthcoming financial results will be crucial in showcasing progress in cash flow and managing debt costs, rather than solely focusing on revenue growth.