November 19, 2025/Cordros Report
We update our views on MTN Nigeria Communications Plc (MTNN) following its 9M-25 unaudited results, which showed solid revenue growth (+57.5% y/y), a 15.10 ppts y/y expansion in EBITDA margin to 51.4%, and an EPS of NGN35.77. The performance was driven by robust data demand, an expanding user base, price adjustments, and cost efficiencies from naira appreciation, disinflation, and revised tower leases. Following our review, we raise our year-end target price by 4.6% to NGN616.07/share (Previously: NGN588.74/share), implying a 29.7% upside from the current price of NGN475.00 (as of Nov 18), and maintain our “BUY” rating on the stock. Our TP adjustment reflects updates to our valuation assumptions, including a lower risk-free rate of 15.6% (Prev: 17.5%) in line with declining bond yields, and a reduced beta of 0.74 (Prev: 0.91) driven by our expectation of a lower forward D/E estimate. Considering the interim dividend declaration of NGN5.00/share, we now project a total 2025E DPS of NGN15.50/share (Dividend yield: 3.3%). Based on our estimates, MTNN is trading at 2025E P/E and EV/EBITDA of 8.9x and 4.5x, respectively.
EBITDA margin accretion to be sustained: We now expect 2025E revenue to grow by 56.4% y/y (Prev. +64.1% y/y), reflecting revisions to our ARPU (+45.0% y/y to NGN5,053.55 | Prev.: +50.0% y/y to NGN5,227.81) and subscriber count (+7.1% y/y to 86.61 million | Prev: +8.6% y/y to 87.84 million) estimates. These revisions are due to expectations of tempered price increases, slower voice segment growth, and a more gradual recovery in subscriber base. Data revenue will remain the key revenue driver (+71.2% y/y | 51.8% of revenue), while voice revenue is expected to rise by 52.5% y/y (32.0% of revenue). Meanwhile, we raise our EBITDA margin estimate to 51.6% (Prev. 50.4%), driven by lower expense growth forecast (+24.7% y/y | Prev.: +34.2% y/y) on the back of improving macroeconomic conditions and cost efficiency gains. Additionally, we forecast a 70.7% y/y decline in net finance costs to NGN389.84 billion, supported by higher finance income (+107.3% y/y) and a net FX gain of NGN84.53 billion. Finally, we forecast an EPS of NGN53.31 (vs loss per share of NGN19.10 in 2024).
Strengthening fundamentals point to further multiple recovery: MTNN’s 2025 valuation setup continues to strengthen as operating dynamics improve and cash generation accelerates. Revenue growth is expected to translate into outsized EBIT gains, with implied operating leverage rising to 2.89 (vs a 5-year average of 0.73), signalling a more responsive earnings base where a 1.0% increase in revenue drives nearly a 3.0% increase in operating profit. This earnings momentum supports a 2025E FCF yield of 9.9% (vs a 5-year average of 7.5%) and a free cash flow margin of 18.7% (vs a 5-year average of 14.9%), reflecting a materially stronger cash-conversion profile. Against this backdrop, we see scope for further re-rating into year-end, with MTNN currently trading at an attractive 4.5x 2025E EV/EBITDA and 8.9x P/E, a discount to its 5-year historical average of 5.6x and 13.6x, respectively.
Valuation: Our year-end target price is NGN616.07/s, derived from an 80/20 blend of DCF and sector-relative valuation estimates. Our DCF FV is derived from an equal blend of FCFF (NGN683.45/s) and FCFE (NGN498.66/s) estimates, assuming a 22.2% WACC, 26.2% CoE and 4.0% terminal growth rate. Similarly, our multiple-based FV was derived from a blend of EV/EBITDA (NGN643.93/s) and P/E (NGN788.29/s) estimates, utilising Bloomberg’s Middle East and African peer averages for both factors (5.8x and 14.8x, respectively) as multipliers.
