MTN Nigeria recorded a strong performance in the first quarter of 2022, on track against its medium-term objectives with services revenue growth of 22.0% and EBITDA margin expansion.
This was achieved through strong business momentum and continued execution of MTN Group’s Ambition 2025 strategy despite challenging business conditions.
Voice Revenue increased by 5.8% as MTN Nigeria saw an increase in gross connections and increased usage of the active SIM base.
This was made possible by the technology company’s expanded customer acquisition touchpoints and rural telephony initiatives, as well as the enhanced customer value management (CVM) toolkit, which reduced the impact of SIM registration and activation restrictions.
Data revenue grew 54.0%, maintaining the accelerated growth trajectory driven by growth in subscriber base and data usage.
According to Karl Toriola, CEO of MTN Nigeria, this has been supported by aggressive expansion of the 4G network and improved network quality and capacity to support increased data traffic.
Data traffic increased by 84.8% YoY and usage (MB per user) by 69.8%
Additionally, MTN Nigeria added approximately one million new smartphones to the network in the first quarter, bringing smartphone penetration to 50.0%.
Thus, the 4G network now covers 71.7% of the population, compared to 70.3% in December 2021.
“We continue to drive home broadband penetration, reaching over 775,000 users, up from over 160,000 in the first quarter. Our goal is to Possess the Home through differentiated value propositions, creating experiences that position MTN as the broadband service provider of choice. We are leveraging our unique strengths and capabilities to capture a significant share of market growth,” the company said.
fintech revenue grew 46.5% driven by growing adoption of fintech services and expanding user base.
MTN also promises continued expansion of the MoMo agent network with over 800,000 registered agents and over 166,000 active agents (agents who complete a minimum of ten revenue-generating transactions within 30 days).
“Having established a significant registered agent network base,” Toriola said, “we are now focused on scaling the active base. We have expanded our agent services to include withdrawal services by deploying point-of-sale (POS) terminals in the agent network, which helped drive our total transaction volume to over 56.1 million, up 132.7% year-on-year, by more than 10.7 million active users (up 135.2%)”.
Digital turnover increased by 35.3%. This shows the increased penetration of MTN Nigeria’s digital products, driven by increased usage of the active base.
“We reached 7.4 million digital subscriptions (up 164.1% year-over-year), with ayoba accounting for 45% of subscriptions and Rich Media accounting for 55%,” he said.
Revenue from digital services was driven by Rich Media, Mobile Advertising and Content VAS.
“We are transforming our Y’ello digital platforms into a single destination that caters to all consumer segments.
“The income of the business activity increased by 34.3%, supported by the integration of new customers in all segments and the adoption of our improved services. Our business is moving from a product to a platform while leveraging basic mobile and fixed connectivity to better serve customers across all segments.
“We have started executing programs to digitize and transform Micro, Small and Medium Enterprises (MSMEs) in Nigeria. A key one is the development of a cloud technology marketplace to empower, educate and enrich MSMEs. Our goal is to drive the adoption of enterprise platforms (Internet of Things and Cloud), creating additional value for our customers and enabling them to innovate while remaining profitable,” explained the CEO.
Value-based capital allocation drives efficiency and improves margins
“We continue to make progress with our spending efficiency program (through which we achieved N6.3 billion in the first quarter) and remain disciplined in capital allocation. As a result, we have contained the increase in 15.7% operating expenses below the rate of inflation in Nigeria This was achieved despite the continued effects of the depreciation of the naira on lease costs and the acceleration of our site roll-out. As a result, our ability to generate operating leverage enabled EBITDA growth of 25.7% and the expansion of our EBITDA margin by 1.5pp to 54.6%.
“Depreciation and amortization increased by 8.9%, due to increased site deployment, while net finance costs increased by 18.7% due to increased borrowings. Profit before tax (PBT) thus increased by 39.4%. Taxation increased by 59.9% due to PBT growth, the net movement of deferred tax provisions and the increase in the school tax rate to 2.5%. These resulted in a 31.1% increase in PAT.
“Capital expenditure over the period increased 80.8% from a lower base in Q1 2021 and aggressive coverage expansion to capture growth opportunities, focusing on the 4G network and the rural telephone program We are also planning part of our investment plan for the year as part of the mitigation of supply chain disruption risks.
“Base capex, excluding asset use rights, increased by 156.8%, with an investment intensity of 17.2% remaining within target levels. We deployed 2,260 4G sites, representing approximately 85% of total sites deployed during the period and reflects solid data revenue growth.
“Higher capital expenditure resulted in a 17.4% drop in free cash flow to N94.7 billion. However, we expect this to improve as the capital expenditure execution rate moderates over the course of the year.
“In April 2022, we tapped into the debt market to raise N127 billion through the issuance of commercial paper. This is part of our strategy to diversify our financing options, with the proceeds allocated to working capital and general business purposes.
“Overall, our funding and liquidity remain well managed, supported by our cash flow and our approved facilities. Our leverage metrics remain well below our financial commitments and we can comfortably meet our operational, financial and capital investment obligations. Additionally, our foreign currency exposure is within manageable limits, with 92% of our debt in local currency, so that our balance sheet can withstand currency volatility.”
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