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Fintech anchors MTN post-COVID-19 recovery in Nigeria

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 28 Oct 2020
MTN Nigeria CEO Ferdi Moolman.
MTN Nigeria CEO Ferdi Moolman.

MTN Nigeria recovered from elevated volatility caused by COVID-19 to record massive revenue growth from digital and fintech services in the nine months ended 30 September.

During the period under review, MTN says, it experienced volatility in both voice and data revenue, affecting the trajectory of its overall service revenue, as well as pressure on costs, which continue to impact operating margins.

However, MTN says after undergoing an unstable second quarter (Q2), it has seen a normalisation of traffic as lockdown restrictions have been removed, with a recovery in voice traffic and continued growth in data.

This, the mobile carrier says, supported a 13.9% growth in service revenue, with an acceleration of growth to 16.5% in the third quarter (Q3) specifically.

Data revenue rose by 57%, with an increase in data usage and traffic. Revenue from digital and fintech services rose by 114.3% and 28.3% respectively, while voice revenue growth was 4.2%.

The Pan-African telecom group released MTN Nigeria unaudited results for the nine months ended 30 September today.

MTN Nigeria CEO Ferdi Moolman comments: “The growth in our digital business continued to accelerate from a low base, and our fintech business delivered impressive results. In Q3, we surpassed our year-end target of 300 000 registered

“Our fintech subscribers increased by 1.2 million in the quarter to 3.4 million, driving higher transaction volumes and fintech revenue growth.”

Furthermore, he says, in the same period, MTN saw a significant increase in its subscriber base with the addition of 3.9 million customers, bringing total subscribers to 75 million.

“Cumulative net additions totalled 10.7 million in the nine months to September 2020 − the first time we have exceeded 10 million additions in an annual cycle with one quarter remaining. We also connected 1.7 million new users to the Internet in Q3 (5.5 million for the nine months), bringing our active data subscribers to 30.7 million.”

To accommodate the increase in traffic, Moolman, who will be departing Nigeria next year, says MTN continued to invest in the capacity and resilience of its network, accelerating the 4G rollout and expanding investments in rural connectivity.

MTN Nigeria’s 4G network now covers 52.9% of the population, up from 48.6% in Q2 and 35.4% in Q3 2019.

In the nine months ending September, MTN’s EBITDA rose by 9.1%, supported by service revenue growth. However, the EBITDA margin declined by 2.3pp to 51.0%, which Moolman says was due to cost pressures arising mainly from increased investments in the network and the impact on costs of the depreciation to the Central Bank of Nigeria and NAFEX exchange rates.

For the period, profit before tax and earning per share declined by 0.6% and 3.3% respectively; however, MTN says, it saw a recovery in Q3 with a growth of 2.2% year-on-year in profit before tax and a marginal decline of 0.7% year-on-year in earning per share.