MTN Nigeria Communications plc (MTNN) has announced audited results for the financial year ended December 31, 2022, with its service revenue up 21.5 percent to N2 trillion from N1.654 trillion in 2021.
The telco’s mobile subscribers also increased by 10.5 percent to 75.6 million after it added 7.2 million more in 2022.
Its active data users rose by 15.3 percent to 39.5 million. MTNN added 5.2 million active users in 2022, while its active fintech subscribers increased by 57.5 percent to 14.9 million.
In the year under review, the telco recorded two million active mobile money (MoMo) wallets since the launch of the payment service bank (PSB).
Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 22 percent to N1.1 trillion.
EBITDA margin increased by 0.2 percentage points (pp) to 53.2 percent. Profit before tax (PBT) grew by 22.3 percent to N534 billion from N436.687 billion in 2021; while profit for the year grew by 21.1 percent to N361.5 billion (excluding non-controlling interest).
Its earnings per share (EPS) rose by 21.3 percent to N17.79 kobo. Capital expenditure (Capex) rose by 23.5 percent to N504.3 billion (up 18.6 percent to N361.0 billion, excluding the right-of-use assets). MTNN proposed final dividend of N10 per share, which brings the total dividend for the year to N15.60 kobo per share, an increase of 18.9 percent.
Operational and financial review
MTNN service revenue grew by 21.5percent on strong growth in data, fintech and digital services. Voice revenue maintained a steady recovery as more customers were reactivated and gross connections ramped up.
Data revenue rose by 46.9 percent on the sustained growth of MTNN active data users and increased data usage. Fintech revenue increased by 19.6percent, with solid growth in Xtratime (MTNN airtime lending product, up 18.3percent) and core fintech services (wallet and super-agent business, up 218.1percent). Digital revenue grew by 64.1percent as the adoption of MTNN digital products continues to grow with user journey optimisation and the growth of the active base, up 37.5percent to 10.3 million.
Commercial and financial momentum
MTNN mobile subscriber net addition was 7.2 million for the year, representing a good recovery from the impact of an increase in churn in third-quarter (Q3) 2022 and demonstrating the effectiveness of the company’s churn management initiatives and interventions to ramp up gross connections.
Active data subscribers grew by 5.2 million and benefited from the telco’s efforts to drive data conversion in new and existing subscribers. The management accelerated the coverage and capacity of MTNN 4G network in response to the rising data traffic, bringing 4G population coverage to 79.1percent (up by 8.7 percentage points). MTNN said 4G traffic now constitutes 79.5percent (up by 9.7 percentage points) of the total traffic on its network. MTNN continued to progress in building its fintech ecosystem and executing its growth strategy with the commercial launch of its MoMo PSB in May 2022. MTNN active fintech users rose by 5.5 million to 14.9 million, of which approximately 2 million are active MoMo wallets.
Karl Toriola, CEO, MTN Nigeria said, “Navigating a challenging operating environment “2022 was challenging due to global macroeconomic and geopolitical volatility, resulting in higher inflation, supply chain uncertainties, foreign exchange volatility and availability. In Nigeria, Inflation reached a 17-year high of 21.5percent in November before moderating slightly to 21.3percent in December, bringing the average for the year to 18.8percent and putting pressure on consumer spending. To curb rising inflation, the Central Bank of Nigeria increased interest rates four times in 2022, bringing the Monetary Policy Rate to 16.5percent – up by five pp during the year. This was further raised by 1 percentage point (pp) in January 2023 to 17.5percent.”
“We continued to manage and invest in the resilience of our business and networks, expanding coverage and capacity with a focus on expense efficiencies and disciplined capital allocation. We became the first mobile network operator to launch a 5G network in Nigeria, providing coverage in key cities in the six geopolitical regions. Since its commercial launch in September 2022, we have rolled out 588 sites and brought the 5G network to 5G-enabled smartphones, starting with iPhone users. In this regard, we made good progress towards the execution of Ambition 2025 while delivering commercial and financial performance in line with our medium-term guidance,” Toriola said.
“We expect investors to react positively to these results. Also, the Board has proposed a dividend of N10 which represents a yield of about 4percent. MTNN recorded a net subscriber addition of about 1.5 million for the quarter and about 7.2 million for the year. Revenue growth was strong across all contributory lines resulting in a service revenue growth of +24percent year-on-year (y/y), Year-to-date, MTNN is up by +4.7percent versus the NGX ASI’s +3.9percent. We rate the stock Neutral. Our estimates are under review,” according to Oluwaseun Arambada’s team of research analysts at FBNQuest Capital in their first reaction to MTNN results.
MTNN said it remains committed to executing its ambition 2025 strategy to sustain the growth and profitability of the business to the benefit of all its stakeholders.
“Our operating environment continues to experience headwinds from the ongoing global macroeconomic and geopolitical volatility, putting increased financial pressure on our customers and business. Despite the challenges, we will continue to invest in the resilience of our business, taking advantage of opportunities embedded within our connectivity and platform businesses.
“We will continue to ramp up gross connections and implement our NIN recovery initiatives to grow the subscriber base. This will be supported by an aggressive pursuit of our rural telephony programme to expand broadband access and drive further digital inclusion.
“In addition, we will continue accelerating 4G and 5G coverage to accommodate the demand for data while pursuing our home broadband strategy to capture a significant share of market growth. We plan to achieve 83percent 4G population coverage in FY 2023 while continuing to roll out additional 5G sites and bring the 5G network experience to more smartphone users,” Toriola said.
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