H1 2023: MTN Nigeria declares 25.4% decline in PBT to N200.4bn

MTN Nigeria Communications Plc (MTN Nigeria) has announced its unaudited results for the half year (H1) ended June 30, 2023 with a decline of 25.4 per cent to N200.4billion from N268.64 billion in H1 2022, attributable to foreign exchange loss.

The telecommunication giant listed on the Nigerian Exchange Limited (NGX) disclosed that its profit for H1 2023 stood at N128.7 billion, a decline of 29 per cent from N181.63 billion reported in H1 2022.  

With the decline in profit, MTN Nigeria’s Earnings per share (EPS) was down by 29.3per cent to N6.33 kobo from N8.95 in H1 2022.

Capital expenditure (capex) declined by 14.4 per cent to N266.8 billion in H1 2023 (down 13.8per cent to N176.3 billion, excluding the right-of-use assets)

Despite the decline in profit, the group declared Interim dividend maintained at N5.60 kobo per share from the prior year.

The topline performance of the communication outfit showed an impressive performance, driven by data and digital revenue growth in the period.

MTN Nigeria’s revenue stood at N1.16 trillion in H1 2023, an increase of 22 per cent from N950.09 billion in H1 2022.

The company said: “Our strong commercial performance drove growth across all our key revenue lines. We recorded double-digit growth of 12.1per cent in voice revenue on the increased usage of our voice propositions and a growing base. This was supported by our customer value management (CVM) initiatives and revamp of voice propositions.

“Data revenue grew by 34.9 per cent, largely due to increased usage supported by the enhanced capacity through network expansion and smartphone penetration. Notwithstanding, data revenue was impacted by the harmonisation of telecommunications codes in Q2. In addition, active data users declined marginally during the period on lower gross connections.

“Our 4G network now covers 80 per cent of the population, up from 79.1 per cent in December 2022, and data usage (GB per user) grew by 28.2 per cent to 8.1GB. The number of smartphones on our network increased by 1.8 million, bringing smartphone penetration to 53 per cent, up 2.4pp YoY.

“We are pleased with the traffic trend on our 5G network, which has reached an average of 21per cent in 5G co-located clusters. We expect to see further growth in traffic having recently enabled Samsung devices on the network, driving further rollout. 5G now covers 5.5 per cent of the population, enabling us to advance our home broadband penetration. We added over 300k home broadband users in H1, bringing our base to 1.6 million. This was supported by deploying our 5G fixed wireless access devices, mobile broadband solutions, and fibre-to-thehome connectivity.

“We recorded 7.8 per cent growth in fintech revenue led by our core fintech services (wallet and MoMo agent business). Our fintech user base was impacted by the effects of the cash shortages on over-the-counter (OTC) transactions during Q1. As a result, our active user base was down by 39.3per cent YoY to 7.0 million, of which approximately 3.1 million represent active MoMo PSB wallets. We have 227k MoMo agents, bringing our services closer to our customers, and 38k merchants in our ecosystem.

“During H1, we completed the reopening of the NIBSS interface for both inbound and outbound transfers, strengthened our control systems, and introduced the basic version of our MoMo app. We saw momentum in the ecosystem with fintech transaction volume up by 67.1per cent YoY.

“We are now focused on driving commercial activities – consumer education and awareness, leveraging the full strength of our distribution network to grow the active wallets and scale the agent and merchant ecosystem while preparing for the rollout of our super app with a bouquet of services for our customers.

“Digital revenue growth of 49.9 per cent was bolstered by revenue from rich media services and content VAS. This was supported by the adoption of our digital products and the growth of the active base, up 56.6% to 14 million. In H1, we brought Amazon Prime Video and Apple

“Music to our customers, expanding our rich media services portfolio. Ayoba, our instant messaging platform, continued to gain traction with the addition of over 2 million users, bringing the monthly active users to 7.2 million in H1. Furthermore, service revenue from the enterprise business rose by 48.5per cent, led by the mobile and fixed connectivity services and underpinned by onboarding new customers across all segments.”

MTN Nigeria CEO, Karl Toriola in a statement said: “Navigating a challenging operating environment

“The operating conditions in the first half of 2023 remained challenging with energy, food, and general inflation at elevated levels. This was due to the ongoing adverse global macroeconomic and geopolitical environment, the cash shortages experienced in Q1, forex volatility and availability and supply chain uncertainties witnessed during the period.

“As a result, the inflation rate in Nigeria rose to an 18-year high of 22.8per cent in June 2023, representing the sixth consecutive month-on-month increase in 2023, with an average of 22.2% in H1. To rein in inflation, the Central Bank of Nigeria (CBN) continued its monetary policy tightening, increasing the monetary policy rate by 2pp to 18.5per cent in H1, and a further 0.25pp increase in July.

“Following the inauguration of President Bola Ahmed Tinubu in May 2023, swift reforms were implemented to remove the fuel subsidy and liberalise foreign exchange management, to bolster investor confidence and drive growth and investment in Nigeria. These policy reforms are expected to be positive for the economy in the medium to long term. However, in the short term, they have created additional financial burdens on consumers and businesses, and these will be fully reflected in the pressures on our margins in H2.

“As a result, the Federal Government has declared a state of emergency to tackle rising food prices and shortages and cushion the effect on consumers. This is supported by further reforms aimed at creating an enabling environment for businesses to thrive.

“We are pleased with the robust commercial and financial performance in H1, delivered against this challenging backdrop. As we navigate these macro headwinds, we continue to invest in our business to further improve the quality of our offering, strengthen our commercial operations and focus on expense efficiencies and disciplined capital allocation to support earnings and cash flow generation.

“To this end, in May, we leased 900MHz and 1800MHz spectrum covering 19 states from NTEL for a 2-year period to enhance coverage and capacity, a significant milestone in the execution of our Ambition 2025 strategy.”