MTN Nigeria reports Q1 growth despite headwinds

BY MIKE OCHONMA

First quarter earnings of MTN Nigeria before interest, taxes, depreciation and amortisation (Ebitda) expanded 17.7 percent to N302.7-billion during the first quarter of 2023.

While the group’s Ebitda margin declined by 1.3 percentage points to 53.3 percent, it remained within MTN Nigeria’s medium-term guidance range of 53 percent to 55 percent.

During the first quarter of 2023, MTN Nigeria posted an 8.5 percent increase in profit before tax to N155.8-billion, while profit after tax, excluding non-controlling interest, increased by 3.8 percent to N101.49-billion, amid a higher effective tax rate mainly owing to an increase in the tertiary education tax and a reduction in deferred tax assets recognised in 2022.

Earnings a share increased by 3.8 percent to N4.94 kobo. “We continued to experience headwinds in our operating environment in the first quarter of 2023. The impacts of the ongoing global macroeconomic and geopolitical developments on energy, food and general inflation were exacerbated locally by petrol and cash shortages experienced during the period. This placed additional pressure on economic activity, consumers and businesses,” says MTN Nigeria CEO Karl Toriola.

“The continued impact of foreign exchange availability, naira depreciation and higher consumer price index adjustments on lease rental costs, the new site rollouts and rising energy costs exerted upward pressure on operating expenses (opex), resulting in a 29.2 percent increase to N173.49-billion,” he adds.

However, the impact of the higher opex was moderated by the cost savings realised from MTN Nigeria’s expense efficiency programmes and its disciplined approach to capital allocation.

During the first quarter of the year, MTN Nigeria reported a 20.5 percent increase in service revenue to N565.9-billion owing to strong voice, data, fintech and digital services growth, supported by an increased subscriber base and use of services.

“Our mobile subscriber base rose 9.4 percent to 76.7-million, the highest level since our operations commenced in 2001. However, cash shortages experienced during the period impacted customers’ ability to recharge through physical vouchers. It also resulted in migration to digital recharge platforms, mitigating the impact,” he says.

Active data users increased by 14.7 percent to 41.2-million, while data revenue increased 40 percent.

The group’s total data traffic increased 50.3 percent during the quarter under review, with fourth-generation (4G) traffic accounting for 81.6 percent.

MTN Nigeria’s 4G network coverage reached 79.3 percent of the population in the first quarter, an increase from 79.1% in December 2022, while data use grew by 31.3% to 7.8 GB per user.

An additional 170 fifth-generation (5G) sites were deployed during the first quarter, increasing population coverage to 4 percent and expanding the network experience to more smartphone users.

In addition, MTN Nigeria added over 804 000 new smartphones to its network, bringing smartphone penetration to 52.7 percent.

“We continued to advance our home broadband penetration by adding 169,000 users in the first quarter, bringing our user base to 1.4-million. This was supported by deploying our 5G fixed wireless access devices, mobile broadband solutions and fibre-to-the-home connectivity,” says Toriola.

During the quarter under review, Fintech revenue increased 8.6 percent and digital revenue grew by 41.2 percent.

Active mobile money (MoMo) wallets increased by 1.2-million in the first quarter of 2023 to 3.2-million. MTN Nigeria’s capital expenditure (capex) declined 25.8 percent to N120.5-billion.