March 1, 2024/CSL Research

In its recently released FY 2023 results, MTN Nigeria sustained its Revenue growth momentum, reporting a 22.7% y/y growth in Revenue to N2.47tn from N2.01tn in FY 2022. On a q/q basis, Revenue increased by 13.3% to N695.90bn in Q4 2023 from N614.21bn in Q3 2023. The growth in Service Revenue (up 22.4% y/y) remained the major driver of the rise in Total Revenue.

Data Revenue growth remained strong in 2023, increasing by 39.8% y/y to N1.07tn from N764.82bn in 2022. The growth was supported by the revamp of the company’s data bundle offerings, an increase in the penetration of smartphones, and investments made to expand coverage and capacity and enhance customer experience. The company noted that its active data users increased by 12.7% y/y to 44.6 million for FY 2023. It also stated that its 4G network now covers 81.5% of the population, up from 79.1% in December 2022, and its 5G network covers 11.3% of the population. Smartphone penetration rose to 55.6% (up 3.1ppt y/y), underpinning data usage (GB per user) growth of 29.1% to 8.6GB from 5.74GB. As a result, the company recorded a 44.9% growth in data traffic, with the 4G network accounting for 81.8% of the total traffic.

Voice Revenue also grew by 9.7% y/y to N1.14tn in FY 2023. The company attributed the growth to the increase in its mobile subscriber base and increased usage driven by the company’s customer value management initiatives and revamped voice propositions. The firm recorded a 5.3% y/y increase in its subscriber base, adding 4m subscribers to increase the mobile subscribers to 79.7m for FY 2023. Likewise, we note a significant improvement in Fintech Revenue, up 2.4% y/y to N86.43bn, and Digital Revenue, up 69.9% y/y to N37.46bn in FY 2023.

Growth in Direct Network Operating Costs surpassed Revenue growth, climbing by 42.6% y/y to N650.50bn in FY 2023 from N456.25bn in FY 2022. Operating Expenses rose by 26.80% y/y to N615.82bn in FY 2023 from N485.65bn in FY 2022. We attribute the growth in OPEX to the elevated inflationary environment, high energy costs and the persistent devaluation of the naira. Despite that, EBITDA increased by 12.3% y/y to N1.20bn in FY 2023 from N1.07bn in FY 2022. However, EBITDA margin shrunk, by 448bps y/y to 48.7% in FY 2023. Operating Profit grew by 5.4% y/y to N773.66bn in FY 2023 from N734.164bn in FY 2022, despite an increase in Depreciation & Amortisation by 27.56% to N428.87bn in FY 2023.

Net Finance Cost increased, up 58.11% y/y to N211.11bn in FY 2023 from N133.52bn in FY 2022. The elevated Net Finance Cost mirrors the 60.9% y/y increase in Finance Cost despite an 87.5% y/y rise in Finance Income. The increase in Finance Income was driven by higher interest earned on amortized investments, while the rise in Finance Cost could be attributed to a rise in Interest expense on borrowings and leases. In 2023, the company witnessed a significant rise in FX losses due to the Naira devaluation. The company recorded FX losses of N740.43bn in FY 2023, up 804.9% from the N81.82bn recorded in FY 2022. We note that the company further reported N507.60bn in FX losses in Q4 2023, a significant rise from the N232.83bn recorded in 9M 2023.

Due to the impact of the FX losses, Pre-tax Profit was down by 134.4% y/y to N177.89bn in FY 2023 from N518.82bn in FY 2022. Consequently, Net Profit declined by 139.3% y/y to N137.02bn in FY 2023 from N348.73bn in FY 2022. EPS declined to negative N6.38/s in FY 2023.

Our estimates are currently under review. Current price; N222.9/s.

MTNN FY 2O23

Source: Company’s Financials, CSL Research

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