MTN Nigeria to lift group in half-year performance

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 01 Aug 2022
MTN Nigeria CEO Karl Toriola.
MTN Nigeria CEO Karl Toriola.

Buoyed by the strong showing of its Nigerian operations, Pan-African telecoms giant MTN is expecting a blowout performance in its half-year results.

The JSE-listed group advised shareholders today that it is finalising its half-year results, and is expecting an increase in earnings per share (EPS) of between 195% and 205% (or 289c to 303c).

“Considering the EPS of 148c for the corresponding six-month period ended 30 June 2021, this translates to a range of 437c to 451c for the six-month period ended 30 June 2022,” it says.

MTN is also expecting an increase in headline earnings per share (HEPS) of between 40% and 50% (or 155c to 194c).

The group’s financial results are expected to be announced on the JSE on or about Thursday, 11 August.

On Friday, the telco group released MTN Nigeria’s interim performance, with the company saying it has made progress in strengthening the resilience of the business in the face of an increasingly challenging operating environment.

Nigeria is MTN’s most profitable and biggest market in the telco’s continental footprint, accounting for a third of the African telecoms giant's annual core profit.

In the six months to June, MTN Nigeria mobile subscribers increased by 7.6% to 74.1 million, active data users increased by 13.2% to 36.8 million, while active fintech subscribers rose by 87.3% to 11.5 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 22.1% to N509.3 billion and the EBITDA margin increased by 0.9 percentage points (pp) to 53.6%.

In the period, MTN’s profit before tax grew by 24.9% to N268.6 billion, while profit after tax grew by 28.1% to N181.6 billion.

“Our financial performance during the period was underpinned by strong commercial momentum, driving broad-based growth across our key revenue lines, such as data, fintech and digital services.

“However, growth developed at a slower rate in Q2 2022 mainly due to the restrictions arising from the new National Identity Number SIM directive, which came into effect on 4 April 2022. Consequently, service revenue grew by 19.9%, broadly in line with our medium-term growth guidance of at least 20%,” comments MTN Nigeria CEO Karl Toriola.

“Our ability to maintain service revenue growth while managing costs led to a 22.1% growth in EBITDA and a 0.9pp year-on-year expansion in EBITDA margin to 53.6%. This was achieved despite upward pressure on our operating expenses driven by higher lease rental costs, the acceleration in our site rollout and rising energy costs.

“The escalation of diesel prices in Nigeria impacted our EBITDA margin by about 0.3pp in H1. The robust EBITDA performance is a testament to the disciplined execution of our expense efficiency programme, which also underpinned our PAT (profit after tax) growth of 28.1%.”

Toriola says the fintech business is ballooning and MTN achieved some important strategic milestones in H1 towards delivering on its Ambition 2025 strategy.

In the half-year, fintech revenue rose by 27.8%, fintech active users rose by 87.3% year-on-year to 11.5 million, of which 2.4 million represent active MoMo wallets.

“We are pleased with the progress since the launch (of MoMo Payment Service Bank) and excited about the prospects of our fintech business and driving financial inclusion in the country. As at the end of June 2022, we recorded 4.2 million registered MoMo wallets, of which 2.4 million are active, generating MoMo transaction volume of approximately seven million within six weeks of operations.”

Also, in the six months, Toriola says “digital revenue grew by 60.9% as penetration of our digital products continues to deepen, driven by increased usage from our active base. Rich media, mobile advertising and content VAS drove revenue growth. We have reached approximately nine million digital subscriptions (up 128.5% YOY), with Ayoba (our instant messaging platform) accounting for 52.4% of the subscriptions and rich media accounting for 47.6%.”