…Policy reforms created additional financial burdens on consumers and businesses.
By Alexander Chiejina.
MTN Nigeria recorded a significant growth in its mid-year unaudited report as mobile subscribers increased by 4.0 per cent to 77.1 million, reflecting an additional 1.5 million subscribers in the first half of 2023. The underlying momentum in the ecosystem was further demonstrated by a 11.5 per cent increase of active data users to 41.0 million,while active wallets rose by 1.1 million in H1 to 3.1 million with its total number of registered MoMo PSB wallets now at over 22 million, Business AM Tech reveals.
Karl Toriola, chief executive officer, MTN Nigeria disclosed that its fintech business (MoMo PSB) remains a key priority for the company as it continues to put structures in place to support the execution of its growth strategy and scale the fintech ecosystem in line with its Ambition 2025 strategy.
According to Toriola the company recorded 7.8 per cent growth in fintech revenue led by its core fintech services (wallet and MoMo agent business). The CEO also disclosed that the fintech user base was impacted by the effects of the cash shortages on over the counter (OTC) transactions during Q1. As a result, he noted that MTN’s active user base was down by 39.3 percent Year-on-Year (YoY) to 7 million, of which approximately 3.1 million represent active MoMo PSB wallets. He added that the telco currently has about 227,000 MoMo agents, bringing its services closer to our customers, and 38,000 merchants in its ecosystem.
“During H1, we completed the reopening of the NIBSS interface for both inbound and outbound transfers, strengthened our control systems, and introduced the basic version of our MoMo app. We saw momentum in the ecosystem with fintech transaction volume up by 67.1 percent YoY,” he said.
Toriola stressed that the company is now focused on driving commercial activities which includes consumer education and awareness, leveraging the full strength of its distribution network to grow the active wallets and scale the agent and merchant ecosystem while preparing for the rollout of its super app with a bouquet of services for customers.
The CEO pointed out that digital revenue growth of 49.9 per cent was bolstered by revenue from rich media services and content VAS. This was supported by the adoption of the company’s digital products and the growth of the active base, up 56.6 per cent to 14 million.
“In H1, we brought Amazon Prime Video and Apple Music to our customers, expanding our rich media services portfolio. Ayoba, our instant messaging platform, continued to gain traction with the addition of over 2 million users, bringing the monthly active users to 7.2 million in H1. Furthermore, service revenue from the enterprise business rose by 48.5%, led by the mobile and fixed connectivity services and underpinned by onboarding new customers across all segments,” the CEO explained.
Despite the gains recorded by the company within the period under review, swift reforms by the federal government which were implemented (removal of fuel subsidy and liberalising foreign exchange management aimed at bolstering investor confidence and drive growth and investment in Nigeria in the short term, created additional financial burdens on consumers and businesses, and these will be fully reflected in the pressures on the company’s margins in H2 2023, MTN Nigeria stated.
According to the report, the immediate impact on results for H1 was the unrealised forex losses included in the telco’s net finance charges. MTN stated that it delivered EBITDA growth of 20.6 per cent, while the EBITDA margin declined by 0.6pp to 53 per cent but remained within its medium-term guidance range of 53 per cent – 55 per cent. This, the company, reported, was achieved through its ongoing expense efficiency programme and disciplined approach to capital allocation.
Meanwhile, operating expenses (opex) rose by 27.8 per cent mainly due to the impact of higher consumer price index (CPI) adjustments on lease rental costs, the new site rollouts, and rising energy costs. These factors also drove the 22.8 per cent increase in depreciation and amortization, the MTN Nigeria unaudited report states.
Further analysis of the report showed that net finance costs increased by 164.3 per cent due to increased borrowings and an unrealised forex loss of N131.5 billion as against N13.6 billion in H1 2022 on net foreign currency liabilities following the significant devaluation of the Naira.
The company’s Profit before tax (PBT) declined by 25.4 per cent. Excluding the impact of the forex loss, PBT appreciated by 17.6 per cent. MTN also reported that the effective tax rate was up by 3.4pp to 35.8 per cent driven mainly by the 0.5pp increase in the education tax rate to 3 per cent, in line with the 2023 Finance Act.
“Overall, profit after tax (excluding non-controlling interest) declined by 29.3% but would have been up by 13.4% excluding the forex loss,” the report added.
