Key Highlights
…Mobile subscribers increased by 4.8% to 77.6 million-Added 2 million subscribers in 9M 2023
…Active data users increased by 13.3% to 43.1 million- Added 3.6 million active users in 9M 2023
…Active mobile money (MoMo PSB) wallets increased by 53.1% to 3.6 million- Added 1.6 million active MoMo PSB users in 9M 2023
…Service revenue increased by 21.4% to N1.8 trillion- Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 16.3% to N907.9 billion
…EBITDA margin decreased by 2.4 percentage points (pp) to 51.2%
…Profit before tax (PBT) decreased by 42.0% to N232.5 billion (up 8.6% to N465.3 billion, adjusted for the foreign exchange (forex) loss)
…Earnings per share (EPS) decreased by 45.2% to N7.06 kobo (up 5.2% to N14.50 kobo adjusted for the forex loss)
…Capital expenditure (capex) increased by 6.9% to N405.0 billion (up 19.7% to N301.4 billion, excluding the right-of-use (RoU) assets
MON, OCT 30 2023-theGBJournal| MTN Nigeria service revenue increased by 21.4% to N1.8 trillion, underpinned by a broad-based increase across the voice (+7.7% y/y), data (+38.9% y/y), digital (+65.3% y/y), fintech (+1.4% y/y) and others (+14.3% y/y) channels, according to its unaudited results for the nine months ended 30 September 2023, published today.
However, while the increase in service revenue supported the 16.3% growth in EBITDA, the EBITDA margin fell by 2.4pp to 51.2%, falling short of management’s medium-term key performance guidance (53.0% – 55.0%). For 9M-23, EBITDA margin declined by 240bps y/y to 51.2%.
”Our EBITDA margin came under pressure as the impact on operating expenses of the forex harmonisation kicked in in Q3, heightened by the rising inflation,” MTN Nigeria CEO, Karl Toriola said in his comment.
Mobile subscriber base reached a new high with the addition of approximately 2 million
in the nine months to 77.6 million. This was supported by the churn management initiatives and interventions to ramp up gross connections.
Notably, data surpassed voice as the largest contributor to revenue, contributing 45.5% of the total outturn in the period.
Toriola alluded that the revamp of data bundle offerings and an increase in its smartphone penetration amid sustained investments to expand coverage, capacity and enhance customer experience underpinned the impressive growth in data revenue.
Meanwhile, the telecomms giant’s Net finance costs (+190.2% y/y) rose markedly to N375,957 in Q3-23 as a significantly higher foreign exchange loss (Q3-23: N101.38 billion | Q3-22: N14.24 billion) influenced a 192.8% y/y growth in finance costs.
The higher FX loss balance points to the impact of the currency devaluation on MTNN’s finance charge.
”The significant movement in the exchange rate since the liberalisation of the forex market resulted in higher forex loss with a knock-on effect on net finance costs, up 174.4%. Consequently, PBT declined by 42.0%. However, our free cash flow remained strong with a 25.2% increase YoY,”Toriola noted.
Meanwhile, finance income grew markedly by 311.5% y/y.
Overall, pre-tax profit declined by 75.7% y/y to N32.08 billion in Q3-23. Following an effective tax rate of 41.8% (Q3-22: 33.8%), profit after tax printed N18.68 billion (-78.6% y/y).
The company’s Earnings per share (EPS) decreased by 45.2% to N7.06 kobo (up 5.2% to N14.50 kobo adjusted for the forex loss).
Just as in H1-23, the dip in earnings was driven mainly by higher expenses (+36.6% y/y) and a marked expansion in net finance costs (N154,772 billion| +190.2% y/y).
”During Q4, we will build on the momentum from Q3 to deliver on our service revenue growth target. We remain focused on our priorities – our network, MoMo PSB acceleration, and operational efficiency – to build the resilience and growth of our business,” the CEO said in his outlook note.
Analysts at Cordros Research tells theGBJournal that even as they expect MTNN’s key fundamentals to remain strong for the rest of the year, they believe the impact of the currency devaluation will remain an inhibiting factor to profitability expansion.
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com| govandbusinessj@gmail.com
