Focus for the week: MTN NIGERIA COMMUNICATIONS PLC FY’24 Earnings Release: MTNN turns the tide in H2’24

Data demand drives topline growth
For the full year, the data business remained the key driver of topline growth, with data revenue surging 49% y/y to ₦1.6 trillion (Vetiva estimate: ₦1.6 trillion), reflecting strong data demand, amid rising active internet users (+7% y/y). Additionally, the company continues to benefit from its customer value management strategy, as the voice services segment posted a 15% y/y growth, supported by a 2% increase in the mobile subscriber base.

MTNN rebounds in H2’24, reversing earlier setbacks
Following its return to profitability in Q3’24, MTNN delivered another positive performance in Q4’24. Revenue rose 42% y/y to ₦991 billion. Once again, the data segment was the key driver, surging 42% y/y to ₦453 billion (Q4’23: ₦320 billion), while voice services grew 16% y/y to ₦353 billion (Q4’23: ₦303 billion). Despite a 75% y/y jump in operating expenses to ₦1.5 trillion, EBITDA margins expanded to 46% in the quarter (Q4’23: 42%), driving a 54% y/y increase in EBITDA to ₦453 billion. However, cumulative losses in Q1’24 and Q2’24 weighed on full-year performance, causing FY’24 EBITDA margins to decline to 39% (Q4’23: 49%), with total EBITDA reaching ₦1.3 trillion (FY’23: ₦1.2 trillion).While sales revenue grew, cost of sales increased sharply by 67% y/y, driven by currency pressures on raw material pricing, amid increased competition among downstream players. A 66%y/y rise in the cost of lubricants, grease, and refined product inventory further highlights these cost pressures. Consequently, gross profit margin decreased to 11% (FY’23: 13%).
Additionally, for the last quarter of the year, net finance costs surged 91% y/y, primarily due to higher debt servicing costs, driven by increased lease balances and elevated interest rates. However, MTNN’s ongoing efforts to mitigate foreign exchange volatility are beginning to yield results. Notably, FX losses were significantly reduced to ₦38 billion in both Q3 and Q4, compared to a steep ₦887 billion in H1’24. As a result, profitability rebounded in the fourth quarter, with profit before tax (PBT) reaching ₦163 billion and profit after tax (PAT) printing at ₦114 billion. Despite the strong recovery in Q3’24 and Q4’24, the cumulative impact of earlier losses weighed on full-year performance, driving losses for the full year to ₦400 billion.

What shaped the past week?
Equities: This week, the local market traded in a bearish manner, shedding 0.51% w/w to close at 105,995.32 points. The Oil & Gas sector led the losers’ charts, down by 1.15% w/w, driven by sell-offs in CONOIL (-10.00% w/w) and TOTAL (-4.93% w/w). Similarly, sell side pressure in JAIZBANK (-7.14% w/w), UBA (-3.56% w/w), and FBNH (-2.39% w/w) weighed on the Banking sector index, which lost 0.45% w/w. The Industrials goods sector also saw losses, shedding 0.21% w/w, driven by losses in BERGER (-9.81% w/w) and WAPCO (-1.60% w/w). However, gains in CORNERST (+10.41% w/w), LINKASSURE (+5.00% w/w), and SOVRENINS (+4.04% w/w) lifted the Insurance sector, rising by 0.89% w/w. The Consumer goods sector also rose by 0.03% w/w.
Fixed Income: In the week, the FGN, through DMO, conducted an NTBs auction with ₦550 billion on offer across the three tenors. By the end of the auction, total subscriptions reached ₦1.3 trillion, while total sales amounted to ₦679 billion. The stop rate for the 91-day bill remained unchanged at 17.00%. Meanwhile, rates on the 182-day and 364-day bills increased to 17.79% (previous: 17.75%) and 18.39% (previous: 17.82%), respectively.
Meanwhile, in the secondary market, mixed sentiment was observed across the NTBs and Bonds markets. By the end of the week, yield changes on benchmark instruments were as follows: 91-Day (-0.33% w/w), 182-Day (-0.35% w/w), and 364-Day bills (-0.40% w/w). Additionally, the 2-year (+0.35% w/w), 3-year (+0.12% w/w), and 7-year (+2.49% w/w) notes inched higher w/w.
Currency: At the NAFEM, the naira depreciated by 0.05% w/w, closing the week at ₦1,517.93 per dollar.
Domestic Economy: Nigeria’s crude oil production as reported by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) declined to 1.47 mbpd in February from 1.54 mbpd in January, falling below its OPEC quota of 1.5 mbpd. This reverses the progress seen in January when output briefly exceeded the quota, raising hopes for improved production levels. However, ongoing challenges such as crude oil theft, pipeline vandalism, and operational inefficiencies continue to limit Nigeria’s ability to sustain higher output. Total oil production, including condensates, also fell from 1.78 mbpd in January to 1.67 mbpd in February, highlighting continued volatility in the sector. The production decline has broader economic implications, particularly for the 2025 budget, which is based on a crude output target of 2.06 mbpd. If production remains weak, government revenues could fall short, exacerbating fiscal pressures. Additionally, lower output may lead to shortages for domestic refineries, potentially increasing reliance on fuel imports and undermining energy security.

Global: The U.S. stock market staged a strong rebound on Friday, with major indices recovering from a sharp sell-off. Investors reacted positively to signs that a potential government shutdown might be averted, though concerns over trade tensions and economic uncertainty kept sentiment in check. Following Thursday’s steep decline, the S&P 500 climbed 1.8%, while the Nasdaq Composite surged 2.3%. The Dow Jones Industrial Average also gained 1.4%. Despite the rebound, all three major indices remain on track for weekly losses exceeding 2%.
Amid market volatility, gold prices soared past $3,000 per ounce for the first time, reflecting investor caution. Historically, gold serves as a safe-haven asset during economic uncertainty. The ongoing trade war and tariff disputes have fueled demand for gold, as traders seek stability in turbulent market conditions.
Meanwhile, European markets rallied on Friday, with the Stoxx Europe 600 rising 1.20%. Germany’s DAX gained 1.89%, London’s FTSE 100 added 1.15%, France’s CAC 40 climbed 1.16%, and the Swiss Market Index advanced 0.80%.
In Asia, Chinese stocks rebounded on Friday, driven by optimism over potential policy measures to boost consumption and increase lending. The CSI 300 Index jumped 2.4%, the Hang Seng Index (HSI) climbed 2.1%, and the SSE Composite Index rose 1.8%, following Thursday’s correction in U.S. markets.

What will shape markets in the coming week?
Equity market: Selling pressures appear to be moderating, as recent declines have created attractive entry points in select counters. We anticipate a moderate uptick in buy-side interest, particularly in stocks that have fallen sharply in past weeks.
Fixed Income: Next week, we anticipate a cautious trading sentiment at the start of the week as investors await the inflation report.