February 28, 2025/Cordros Report

MTN Nigeria Communications Plc (MTNN) published their 2024FY audited financials yesterday (27 February) after market close, reporting a net loss of NGN400.44 billion (vs net loss of NGN137.02 billion in 2023FY), translating to a loss per share of NGN19.05 (2023FY loss per share: NGN6.38). The loss was primarily driven by sustained currency depreciation (-41.0% y/y) carried over from 2023 and the elevated interest rate environment (MPR: 27.5%), which contributed to a sharp increase in finance costs (+82.2% y/y) and net FX losses (+25.0% y/y). However, in Q4-24, the company reported a net profit of NGN114.49 billion, marking a strong turnaround from the NGN122.03 billion net loss in Q4-23 and an improvement from the NGN4.13 billion profit reported in Q3-24. 

Service revenue increased by 35.9% y/y in 2024FY to NGN3.33 trillion (Q4-24: +41.7% y/y to NGN980.52 billion), driven by broad-based growth across voice (+14.5% y/y; 39.0% of revenue), data (+49.1% y/y; 47.8% of revenue), digital (+95.2% y/y; 2.2% of revenue), fintech (+23.2% y/y; 3.2% of revenue), and other services (+108.0% y/y; 7.8% of revenue) channels. Additionally, non-service revenue, which includes earnings from device and SIM card sales, surged by 83.8% y/y to NGN25.92 billion.

Consistent with recent trends, the data segment remained the primary growth driver, benefitting from rising consumer demand for high-speed internet services and an expanding user base. Specifically, the company recorded a 42.9% y/y increase in data traffic, driven by a surge in average monthly data usage per customer, which rose by 33.6% y/y to 11.2GB (Q4-24: +37.9% y/y to 13.2GB), highlighting increased digital adoption. The growth in data consumption was further supported by wider smartphone penetration (+270bps y/y to 58.2%) and network expansion with MTNN’s 4G coverage now reaching 82.4% of the population (+90bps y/y), while 5G coverage expanded to 12.7% (+150bps y/y). Meanwhile, the total data subscriber base increased by 3.10 million to 47.70 million in 2024 (Q4-24 net addition: +2.40 million), despite disconnections stemming from the NIN-SIM linkage directive. Furthermore, the company added 1.20 million new home broadband subscribers, pushing its total home broadband user base to 3.2 million.
 
Voice revenue also recorded growth, which management attributed to increased usage and an expanding user base. We note that despite regulatory-driven disconnections linked to the NCC’s NIN-SIM linkage directive, the company’s total subscriber base grew by 1.20 million to 80.90 million in 2024, with a notable Q4-24 net addition of 3.90 million subscribers, signaling a recovery in subscriber acquisitions.
 
Meanwhile, the growth in value-added services, including digital and fintech offerings, was driven by greater adoption of MTN Xtratime and other digital products. Meanwhile, MTNN’s mobile money (MoMo) segment recorded a 4.3% y/y increase in transaction volume, despite a 46.6% y/y decline in active MoMo wallets to 2.8 million and a significant reduction in its agent (-76.8% y/y) and merchant (-79.2% y/y) network. These declines reflect the company’s strategic sales force optimization, which is centered on deepening service penetration, enhancing monetization, and reducing acquisition costs.

Further down, total expenses increased by 61.7% y/y (Q4-24: +33.9% y/y), driven by inflationary pressures, higher energy costs (+43.4%), and naira depreciation (-40.1%). These macroeconomic headwinds significantly impacted the company’s operating costs, particularly tower lease expenses, which rose sharply by 92.8% y/y to NGN969.32 billion. The faster increase in expenses relative to revenue led to a 963bps y/y contraction in EBITDA margin to 39.1%. However, the successfully renegotiated lease contracts with IHS generated cost savings and supported EBITDA margin in H2-24, particularly in Q4-24, where EBITDA margin improved to 45.8% (+342bps y/y | +816bps q/q).
 
Elsewhere, net finance costs surged by 90.1% y/y to NGN403.21 billion (Q4-24: +75.3% y/y to NGN119.21 billion) reflecting higher interest expense on leases (+144.7% y/y) and borrowings (+37.1%). These increases were primarily driven by naira depreciation and the addition of new lease obligations totaling NGN901.00 billion, arising from the renewal and extension of tower lease contracts. Similarly, net FX losses grew by 25.0% y/y to NGN925.36 billion reflecting the continued impact of the weaker naira and a 95.0% reduction in the company’s outstanding foreign currency Letter of Credit (LoC) debt, which fell from USD416.60 million to USD20.80 million. This paydown accounted for c.86.0% (NGN483.23 billion) of the NGN561.94 billion in realised FX losses. However, in Q4-24, net FX losses declined significantly by 92.3% y/y to NGN20.43 billion, reflecting the positive impact of lower FCY exposure following the substantial reduction in outstanding FCY debt.

Finally, MTNN reported a pre-tax loss of NGN550.33 billion in 2024FY (vs a pre-tax loss of NGN177.89 billion in 2023FY). After accounting for a tax credit of NGN149.89 billion, the company posted a net loss of NGN400.44 billion for the year (2023 net loss: NGN137.02 billion). Meanwhile, in Q4-24, the company reported a profit before tax of NGN163.31 billion (Q4-23 loss before tax: NGN168.04 billion) and profit after tax of NGN114.49 billion (Q4-23 loss after tax: NGN122.03 billion).

Comment: MTNN’s strong operational performance was significantly impacted by macroeconomic headwinds, including sustained currency depreciation, inflationary pressures, and the high-interest rate environment. However, cost optimization initiatives, such as the renegotiation of IHS tower leases, helped drive a modest improvement in EBITDA margin and facilitated a return to positive earnings in Q3-24 and Q4-24. Looking ahead to 2025FY, we anticipate a full recovery and a return to profitability, alongside a restoration to a positive equity balance. This outlook is supported by the recent 50.0% tariff increase approved by regulators, ongoing subscriber recovery, a more stable currency environment, lower FCY debt exposure, and continued cost-efficiency measures. Our estimates are under review.