MTN Nigeria Communications Plc released its Q3 2022 Unaudited results for the period ended September 30^th, 2022.

Key Highlights

• Revenue grew by 20.71% from N1.21trn to N1.46trn.
• Profit before tax stood at N400.67bn
• Profit after tax stood at N269.04bn
• Share Price Currently Stands at N196.9k

MTN Nigeria Communications Plc (MTN Nigeria) announces its unaudited results for the nine months ended 30 September 2022. Salient points: 

• Mobile subscribers increased by 9.7% to 74.1 million
  1. Added 5.7 million subscribers in 9M 2022 
• Active data users increased by 14.6% to 38.0 million 
  1. Added 3.7 million active users in 9M 2022 
• Active fintech subscribers rose by 68.7% to 11.2 million 
  1. 1.8 million active MoMo wallets since the launch of PSB 
• Service revenue increased by 20.6% to N1,452.7 billion 
• Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 23.0% to N780.6 billion 
• EBITDA margin increased by 1.0 percentage points (pp) to 53.6% 
• Profit before tax (PBT) grew by 24.7% to N400.7 billion 
• Income tax paid increased by 26.9% to N139.5 billion 
• Profit after tax (PAT) grew by 22.1% to N269.0 billion 
• Earnings per share (EPS) rose by 22.1% to N13.20 kobo 
• Capital expenditure (Capex) rose by 45.2% to N379.0 billion (up 51.3% to N251.8 billion, excluding the right-of-use assets)

MTN Nigeria CEO Karl Toriola comments: Navigating a challenging operating environment “Our operating environment remained challenging in the first nine months of 2022. The ongoing global macroeconomic and geopolitical volatility continued to drive up energy, food and general inflation, with the annual inflation rate in Nigeria rising to a 17-year high of 20.8% in September 2022. Supply chain uncertainties were exacerbated by the availability of foreign currency needed for capital expenditure. These headwinds continue to put severe financial pressure on consumers and businesses. 

Against this backdrop, we continued to support our communities and sustain investment in the coverage and capacity of our 4G network and the rollout of 5G sites, with a focus on expense efficiencies and disciplined capital allocation. This has underpinned a resilient commercial and financial performance in the period, also enabled by the unwavering support of our customers and stakeholders, as well as the hard work and commitment of our people.

Creating shared value in our communities 

As part of our work to build sustainable societies, we continue to invest in connectivity for digitally excluded populations, adding 650 rural locations, and bringing the total locations on our rural telephony program to 1,844. We remain committed to further expanding rural broadband access. 

We continued to progress our corporate social investment programme. Following the announcement of our intention to participate in the Federal Government’s Road Infrastructure Tax Credit (RITC) scheme, we have now obtained Federal Executive Council approval to dualise the 110-kilometre Enugu-Onitsha Expressway. This project aligns with our Ambition 2025 strategic pillar to ‘create shared value’. We are excited about the impact the project will have on the lives of Nigerians, once completed. 

The MTN Nigeria Foundation continues to implement a range of programs, handing over fully furnished ICT laboratories to 39 public secondary schools in 33 states, installing 30 solar-powered boreholes in 28 states, and reaching more than 32,000 people in 401 communities through medical outreach. In addition, the Foundation awarded scholarships to over 1,000 scholars, bringing the total value of granted scholarships to approximately N3 billion, benefitting over 4,000 young Nigerians.

These initiatives align with the Foundation's core objectives – driving youth empowerment and addressing national priority issues. 

In addition, we enhanced our contributions to government revenue with a 26.9% increase in income tax paid to the Federal Inland Revenue Services to N139.5 billion. This comprises company income tax, education tax, Police Trust Fund and National Agency for Science and Engineering Infrastructure levies. 

Solid commercial and financial momentum 

We added 5.7 million mobile subscribers in the nine months bringing our base to 74.1 million, notwithstanding an increase in churn in Q3 2022. This was expected following the NCC’s directive to restrict outgoing calls for subscribers whose SIMs are not associated with NINs. As a result, there was a marginal quarter-on-quarter decline in mobile subscribers by approximately 57k. 

Encouragingly, the increase in churn was largely offset by the acceleration in gross connections. We anticipate a moderation in churn in Q4, which should support base growth broadly in line with our expectations for FY 2022. 

The investments we make to enhance the quality and coverage of our network continue to yield positive results, driving higher data usage and an expansion of our user base. We added 3.7 million active data subscribers in the nine months, with 4G population coverage at 77.1% (up 7.9pp YoY). 4G traffic now constitutes 80.4% of the total, reflecting a 9.2pp YoY increase in its contribution. 

Following the commercial launch in September 2022, MTN Nigeria became the first mobile network operator to roll out 5G network in Nigeria, providing coverage in key cities in the six geopolitical regions. 5G provides the foundation on which future network performance will be built and puts MTN Nigeria at the forefront of delivering technological advancements in the country. 

Since the commercial launch of our MoMo Payment Service Bank (PSB) operations in May 2022, we have focused on building our fintech ecosystem and executing its growth strategy. Our active fintech users at the end of September 2022 were 11.2 million, of which 1.8 million are active MoMo wallets (down 29.4% in Q3).

During Q3, we moderated commercial activities and prioritised the enhancement of our control systems. This has resulted in short-term pressure on our active base in Q3 as the Nigerian Interbank Settlement System (NIBSS) interface has been temporarily suspended. We expect a more sustainable growth of active wallets once we reopen NIBSS and drive initiatives to grow our base. We anticipate that NIBSS will be reopened in Q4. 

Overall, we remain excited about the prospects of our fintech business and will aggressively pursue its expansion and growth; it will play a pivotal role in driving financial inclusion in the country. 

Our strong commercial momentum drove broad-based growth across all revenue lines, demonstrating the underlying strength and resilience of the business. We recorded a 20.6% increase in service revenue, marginally below the general inflation rate but in line with our medium-term growth guidance. 

Our ability to maintain service revenue growth while unlocking efficiencies through disciplined execution of our expense efficiency programme led to an acceleration in EBITDA growth to 23.0% and EBITDA margin expansion of 1pp to 53.6%, in line with our medium-term target range. 

Finally, we continue to execute our strategy to deliver service revenue growth in line with medium-term guidance. As we manage the increased pressures in the macro economy and our business, we will continue to focus on extracting efficiencies and driving operating leverage to support growth in earnings, cash flow and returns over the medium term.”