April 30, 2025/Cordros Report

MTN Nigeria Communications Plc (MTNN) published its Q1-25 unaudited results yesterday (29 April), reporting an EPS of NGN6.38 (vs loss per share of NGN18.63 in Q1-24). The recovery in earnings was driven by a 40.5% y/y increase in revenue and a substantial 99.2% y/y decline in net FX losses to NGN5.53 billion (Q1-24: NGN656.37 billion).
 
Service revenue increased by 40.5% y/y to NGN1.05 trillion, reflecting notable growth across all key segments – data (+51.5% y/y; 50.4% of revenue), voice (+27.7% y/y; 38.8% of revenue), digital (+92.1% y/y; 2.5% of revenue), fintech (+57.9% y/y; 3.4% of revenue), and other service revenue (+57.9% y/y; 4.8% of revenue). Additionally, non-service revenue, including device and SIM card sales, grew by 45.4% y/y to NGN8.24 billion.
 
The data segment remained the primary growth driver, benefiting from an expanding user base, increased data consumption, and price adjustments. Specifically, the total data subscriber base increased by 13.0% y/y to 50.30 million (Q1-25 net additions: +2.60 million). Data traffic rose by 46.4% y/y, with average monthly usage per subscriber increasing by 29.5% y/y to 12.8GB. This growth was further supported by rising smartphone penetration (+550bps y/y to 60.7%) and network expansion (4G coverage: +110bps y/y to 82.7%, 5G coverage: +30bps y/y to 12.7%). Additionally, the regulatory approval for price increases in February 2025, with a 50.0% ceiling, further bolstered revenue from the data segment.
 
On voice, the segment’s growth was driven by subscriber acquisition and retention, with the voice subscriber base expanding by 8.2% y/y to 84.10 million (Q1-25 net additions: +3.20 million). The segment’s revenue growth was also supported by price adjustments and consistent usage trends.
 
Elsewhere, the growth in value-added services, including digital and fintech, posted impressive gains, driven by higher demand for content and growing adoption of MTNN’s airtime lending product – Xtratime.
 
Meanwhile, total expenses increased by 23.9% y/y, lagging revenue growth due to cost-saving measures, including the renegotiated IHS tower lease agreement, which reduced FX exposure and capped price increases. Management also added that ongoing cost-efficiency initiatives helped contain operating costs, resulting in a 714bps y/y expansion in EBITDA margin to 46.6% (+82bps q/q).

Further down, net finance costs increased by 44.0% y/y to NGN134.55 billion, primarily due to higher interest expenses on leases (+142.5% y/y) caused by naira depreciation and the addition of new lease obligations. In contrast, net FX losses plummeted by 99.2% y/y to NGN5.53 billion, reflecting relative naira stability and the significantly reduced foreign currency-denominated debt in 2024.
 
Finally, MTNN reported a pre-tax profit of NGN202.65 billion (vs. a pre-tax loss of NGN575.69 billion in Q1-24). After accounting for a tax expense of NGN68.97 billion, the company posted a profit after tax of NGN133.68 billion, a recovery from the loss after tax of NGN392.69 billion in Q1-24.

Management call on Friday (May 02) at 3.00 p.m. Nigerian time. Click here to register.

Comment: As expected, MTNN continued its recovery from the challenges posed by naira depreciation, which weighed on its 2023FY and 2024FY performance. The robust revenue growth reported in Q1-25 translated into positive earnings, as cost pressures subside and FX losses were significantly reduced. Looking ahead, we anticipate this momentum to persist, particularly with the full impact of the new tariff structure expected to materialise in Q2-25. We remain confident in a complete recovery, a return to profitability, and a restoration of a positive equity balance, as highlighted in our previous update. Our estimates are under review.