October 31, 2024/CSL Research
In its recently released unaudited 9M 2024 results, MTN Nigeria sustained its Revenue growth momentum, reporting a 33.7% y/y growth in Revenue to N2.37tn from N1.77tn in 9M 2023. On a q/q basis, Revenue increased by 5.7% to N831.12bn in Q3 2024 from N786.14bn recorded in Q2 2024. Growth in Service Revenue (up 33.6% y/y) remained the major driver of the rise in Total Revenue. During the year, the management noted that it disconnected 17.5 million revenue-generating subscriber lines to comply with the NCC’s directive on NIN-SIM linkage. Although most of these lines have since been reconnected, it resulted in a slight y/y decrease of 600,000 subscribers bringing the company’s total subscribers to 77 million in 9M 2024 from 77.6 million in 9M 2023.
Despite the impact of the NIN-SIM linkage, data revenue rose sharply by 52.3% y/y, reaching N1.14bn in 9M 2024, up from N749.53bn in 9M 2023. Management attributed this growth in data revenue to an expanded user base and higher data usage. The company’s data user base grew by 5.1% reaching 45.3% in 9M 2024, up from 43.1% in 9M 2023. Increased demand for digital services, social media, and streaming content has driven data consumption. Furthermore, the growing need for reliable, high-speed internet, especially among SMEs and urban households, has significantly contributed to the rise in data revenue.
Voice revenue increased by 13.8% y/y, rising to N949.43bn in 9M 2024 from N834.00bn in 9M 2023. The company attributed this growth to higher user activity and an expanding subscriber base, driven by customer value management initiatives, enhanced service quality, and revamped voice offerings. Additionally, Fintech revenue rose by 18.0% y/y to N76.31bn, while digital revenue saw a significant increase of 103.1% y/y, reaching N50.19bn 9M 2024.
MTN NIGERIA 9M 2024
Source: Company data, CSL Research |
Direct Network Operating Costs grew faster than Revenue, surging by 101.5% y/y to N902.08bn in 9M 2024, up from N447.60bn in 9M 2023. Operating Expenses also rose significantly, increasing by 45.7% to N608.01bn from N417.42bn over the same period, driven by elevated inflation, high energy costs, and ongoing Naira devaluation.
Consequently, EBITDA declined by 5.3% y/y to N860.15bn in 9M 2024, down from N907.42bn in 9M 2023, with the EBITDA margin contracting by 1492 basis points to 36.3%. Operating Profit fell 21.8% y/y to N475.30bn, compared to N607.50bn in 9M 2023. Additionally, Depreciation and Amortization expenses rose by 28.1%, reaching N384.85bn in 9M 2024.
Net Finance Costs surged by 98.47% y/y, reaching N284.00bn in 9M 2024, up from N143.09bn in 9M 2023. This increase reflects an 84.7% y/y rise in Finance Costs and an 8.3% decline in Finance Income. The drop in Finance Income was due to lower interest earnings on investments, while the rise in Finance Costs stemmed from higher interest expense on borrowings and leases. Additionally, the company experienced a substantial increase in FX losses, driven by the further devaluation of the Naira, resulting in FX losses of N904.93bn in 9M 2024.
These FX losses contributed to a 7146.4% increase in the Pre-Tax loss, which reached N713.63bn in 9M 2024, compared to N9.85bn in 9M 2023. Despite reporting a Tax Credit of N198.70bn in 9M 2024 compared with a Tax Expense of N5.14bn in 9M 2023, the company still recorded a Net Loss of N514.93bn in 9M 2024, significantly higher than the N14.99bn Loss reported in 9M 2023.
We have a target price of N234.26/s for MTN Nigeria with a HOLD recommendation. Current Price; N175.10/s.
Kindly click on the below link to download the full report.
MTN Nigeria 9M 2024 Earnings Quick Take .pdf
