MTN Nigeria reports Q1 ’23 results

MTN Nigeria Plc has released its financial results for the first-quarter (Q1) ended March 31, 2023. The results at the Nigerian Exchange Limited (NGX) show MTNN Q1 2023 service revenue grew by 20.6 percent year-on-year (y/y) to N568billion and outperformed FBNQuest Capital research forecast by +6percent.

While MTNN growth was supported by all revenue segments, digital revenue recorded the strongest growth (+41.2percent y/y), followed by data (+40percent y/y), and Fintech (+8.6percent y/y).

Voice revenue grew by +7.3percent y/y. On the cost lines, opex and net finance costs surprised negatively by +9percent and +31percent respectively.

Year-to-date (YtD), MTNN share price is up by +7 percent versus NGX ASI’s +1.92percent.
“We rate the stock outperform. Our estimates are under review,” FBNQuest Capital research analysts said.

“Our first impression is that the increase in net finance cost is attributable to the elevated cost of borrowing due to the rise in market interest rates.

“As such, compared with Q1’22, EBITDA, and PBT margins were lower by -133bps y/y and -307bps y/y respectively to 53.3percent and 27.4percent respectively.

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The company’s PBT of N156billion grew by +8.5percent y/y but missed our forecast by around -9percent. Below the tax line, a negative surprise of N1.2billion in other comprehensive income (OCI) trimmed total comprehensive income to N100billion, resulting in a y/y growth of +3.3percent. We expect investors to react positively to these results,” FBN Quest Capital research analysts said.

On a positive note, MTNN recorded net subscriber adds of about 1.1 million in Q1’23. “The impressive y/y outturn of service revenue was a result of y/y increases across all revenue lines. Despite cost increases, EBITDA, PBT, and PAT grew by +17.7percent y/y, +8.5percent y/y, and +3.3percent y/y respectively”.

“Negatives: The company suffered margin compression due to increases in opex and net finance costs. A negative surprise of N1.2billion on the OCI line trimmed total comprehensive income to N100billion,” the added.