Continental giant in telecoms, MTN Nigeria Communications Plc (MTNN) released its Q1-23 unaudited results this morning (Thursday, April 27, 2023), showing a 3.8% y/y increase in EPS to NGN4.94. The growth in earnings was driven mainly by the robust expansion in the top line (+20.6% y/y) amid a 133bps decline in EBITDA margin.
Revenue grew by 20.6% y/y in Q1-23, primarily driven by the growth in data (+39.4% y/y) revenue. Management revealed that the growth in data revenue, which contributed 40.1% (Q1-22: 34.7%) to revenue was delivered through a combination of increased subscribers (Q1 net additions: +1.70 million), increased usage and traffic across the 4G & 5G networks (+50.3% y/y) and a roll out of an additional 170 5G sites.
The growth in MTNN’s subscriber base (Q1 net additions: +1.10 million) provided support for voice revenue (+7.4% y/y) which accounted for 41.3% of total revenue in Q1-23. Pertinently, MTNN’s subscriber base grew to its highest level (76.70 million subscribers) since commencement of operations in 2001. According to management, the key drivers for this were increased usage supported by a revamped voice proposition, customer value management initiatives and improved rural coverage.
During the quarter, total expenses grew by 24.2% y/y, owing to the (1) continued impact of FX illiquidity; (2) naira devaluation and higher consumer price index (CPI) adjustments on lease rental costs; (3) new site rollouts; and (4) rising energy costs.
EBITDA (+17.7% y/y) grew slower than revenue, with EBITDA margin printing 53.3%, 133bps lower than the previous quarter, owing to the increased costs.
Net finance costs (+42.2% y/y) rose in Q1-23, following a 44.0% increase in finance costs – total debt grew 57.6% y/y (+24.1% y/y incl. lease liabilities) to NGN1.56 trillion as the company issued a NGN150.00 billion commercial paper in March 2023. Finance income increased by 57.3% y/y.
Overall, pre-tax profit grew 8.5% y/y to NGN155.78 billion in Q1-23. Following an effective tax rate of 35.0% (Q1-22: 32.6%) profit after tax printed NGN101.30 billion (+4.6% y/y).
