April 30, 2024/CSL Research
In its recently released unaudited Q1 2024 results, MTN Nigeria sustained its Revenue growth momentum, reporting a 32.5% y/y growth in Revenue to N752.98bn from N568.14bn in Q1 2023. On a q/q basis, Revenue increased by 8.2% from the N695.90bn recorded in Q4 2023. The growth in Service Revenue (up 32.0% y/y) remained the major driver of the rise in Total Revenue.
Data Revenue increased by 53.4% y/y to N349.51bn from N227.82bn in Q1 2023. The growth was supported by the company’s improved data bundle offerings, its wide network coverage and enhanced capacity. In September 2023, the company acquired an additional 2,600MHz spectrum, which added additional capacity to its network. The company noted that its data users increased by 8.0% y/y to 44.5 million for Q1 2024 and its 4G network now covers 81.6% of the population, up from 81.5% in December 2023 while its 5G network covers 12.4% of the population, up from the 11.3% recorded in December 2023.
Voice Revenue also grew by 14.9% y/y to N318.92bn in Q1 2024. The company attributed the growth to increased usage driven by the company’s customer value management initiatives and revamped voice propositions. The firm recorded a 1.3% y/y increase in its subscriber base, adding 1m subscribers to increase the mobile subscribers to 77.7m for Q1 2024. Likewise, we note an improvement in Fintech Revenue, up 0.7% y/y to N22.85bn, and Digital Revenue, up 88.6% y/y to N13.60bn in Q1 2024.
MTN NIGERIA Q1 2024
| Source: Company data, CSL Research |
Growth in Direct Network Operating Costs surpassed Revenue growth, climbing by 86.7% y/y to N252.82bn in Q1 2024 from N135.43bn in Q1 2023. Operating Expenses rose by 56.2% y/y to N203.20bn in Q1 2024 from N130.06bn in Q1 2023. We attribute the growth in OPEX to the elevated inflationary environment, high energy costs and the persistent devaluation of the Naira. Consequently, EBITDA decreased by 1.9% y/y to N296.96bn in Q1 2024 from N302.65bn in Q1 2023. EBITDA margin shrunk, by 1,383bps y/y to 39.4% in Q1 2024. Operating Profit declined by 15.7% y/y to N174.08bn in Q1 2024 from N206.62bn in Q1 2023, driven by an increase in Depreciation & Amortisation by 27.96% to N122.88bn in Q1 2024.
Net Finance Cost increased by 138.24% y/y to N93.41bn in Q1 2024 from N39.21bn in Q1 2023. The elevated Net Finance Cost mirrors the 115.4% y/y increase in Finance Cost and a 19.5% decline in Finance Income. The decline in Finance Income was driven by lower interest income earned on investments, while the rise in Finance Cost could be attributed to a rise in Interest expense on borrowings and leases. The company witnessed a significant rise in FX losses due to the further devaluation of the Naira. The company recorded FX losses of N656.37bn in Q1 2024.
The FX losses led to a Pre-tax Loss of N575.69bn in Q1 2024 compared with a Pre-Tax Profit of N162.91bn in Q1 2023. The company reported a Tax credit of N183.0bn in Q1 2024 compared with a Tax Expense of N54.48bn in Q1 2023. Despite the Tax Credit, the company recorded a Net loss of N392.69bn in Q1 2024 compared with a Net Profit of N108.43bn recorded in Q1 2022. EPS declined to negative N18.63/s in Q1 2024.
We have a target price of N257.91/s for MTN Nigeria with a Buy recommendation. Current Price; N202/s.
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CSL MTN Nigeria Earnings Quick Take Q1 2024.pdf
