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MTN Nigeria defies COVID-19 pressure, posts double-digit growth

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MTN Nigeria CEO Ferdi Moolman.
MTN Nigeria CEO Ferdi Moolman.

Africa’s biggest mobile carrier MTN recorded double-digit growth in digital and fintech revenue for three months ending March, amid growing concerns surrounding the effect of COVID-19 on businesses on the continent.

The ripple effects from the COVID-19 crisis continue to spread throughout the business world, with many industries now feeling its destructive impact.

However, MTN says its digital revenue grew by 63.7%, while fintech was up by 36.1%, with an improvement in the uptake of its digital offerings in the three months.

MTN says the digital business returned to growth, “with revenue increasing 63.7% (+8% quarter-on-quarter) supported by its portfolio of digital products and services, and improvement in the customer journey experience.

“There was an improvement in the uptake of digital offerings, and efforts to expand the active user base for the digital business continued to yield positive results. During the quarter, 1.6 million new users were added, bringing the active base for digital subscriptions to 3.8 million users.”

Similarly, MTN recorded fintech revenue growth was 36.1% (+10.8% quarter-on-quarter) in the first quarter of 2020, which it says was driven by an increase in the adoption of MTN Xtratime, an airtime lending service.

“70 000 MoMo [Mobile Money] agents were added in the quarter, bringing the total number of registered agents to 178 000 nationwide. The total volume of transactions processed by agents during the quarter was over 5.6 million, about 80% of which were airtime vending. Transaction fees for all money transfers using the MoMo agent network were suspended for an initial period of one month starting 23 March 2020, as part of the Y’ello Hope Package,” it says.

During the period, MTN’s mobile subscribers increased by 4.2 million to 68.5 million, active data users went up by 1.7 million to 26.8 million and the telco’s service revenue increased by 16.7% to NGN328.5 billion.

For shareholders, earnings per share increased by 5.6% to N2.5 kobo.

Further, MTN says its enterprise business in Nigeria continued to improve, with revenue growth of 12.7%.

“Enterprise business includes revenue from mobile and fixed connectivity, cloud and ICT solutions, and devices. It cuts across voice, data and digital services for SMEs, public sector and large enterprise customers.”

Commenting on the performance, MTN Nigeria CEO Ferdi Moolman says: “This performance was achieved against the backdrop of several developments during the quarter. Value-added tax was increased in February 2020 from 5% to 7.5%, which adversely affected both revenue and costs.

“The situation has been exacerbated by upheavals in the global oil market, which put significant downward pressure on oil prices, leading to an exchange rate adjustment by the Central Bank of Nigeria on 20 March 2020, increasing some of our costs. In addition, a series of lockdown measures began being implemented globally in response to the COVID-19 pandemic, resulting in significant operational challenges and supply chain disruptions.”

Moolman says MTN has contributed N1 billion to the Coalition Against COVID-19, a private-sector task force working to increase public awareness and provide food relief to 1.7 million households nationwide.

“In addition, MTN customers have been granted free daily access to key health-related Web sites, and fees for local money transfers via the MoMo Agent Network have been waived. Finally, to ensure the most vulnerable and marginalised communities are not left behind, 300 free SMSes were provided per customer for one month in the first instance. To date, more than a billion free messages have been sent,” he says.

MTN regained its footing in Nigeria in 2019, after years of continuous litigation. The telco had endured long-running court battles with authorities.

The telco recently received a fresh lifeline in Nigeria, following the decision by the attorney-general to withdraw a $2 billion tax claim.

Prior to that, in August 2018, the Central Bank of Nigeria (CBN) demanded the South African-based company repatriate $8.1 billion (R117 billion) to Nigeria, which the bank said it had sent abroad in breach of foreign exchange regulations.

MTN denied the allegations.

In December of the same year, MTN agreed to make an almost $53 million payment to resolve the dispute. At the time, it was agreed MTN would pay a notional reversal amount of $52.6 million, without admission of liability.

This was for a 2008 private placement remittance worth around $1 billion that the CBN found was based on certificates that did not have final approval.

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