MTN Nigeria Communications Plc (MTNN) released its Q2-23 unaudited results at the close of business on Friday (July 28), showing a 67.1% y/y decrease in standalone EPS to NGN1.38, bringing H1-23 EPS to NGN6.33 (Q2-22: NGN8.95). The dip in earnings was driven mainly by the marked expansion in net finance costs (+164.3% y/y). The board proposed an interim dividend of NGN5.60/s, which implies a yield of 2.1% on the last closing price of NGN272.00 (July 28).
Revenue grew by 23.3% y/y in Q2-23 (H1-23: 22.0% y/y), following a broad-based increase across MTNN’s value channels – Voice (+17.3% y/y), Data (+30.4% y/y), Digital (+58.6% y/y), Fintech (+7.0% y/y) and Others (+24.0% y/y).
Management alluded that improved usage of its voice propositions and increased subscriber base supported voice revenue (+17.3% y/y) in the period. Pertinently, MTNN’s subscriber base (Q2 net additions: +0.40 million) grew to 77.10 million as of H1-23, with the addition of 1.50 million subscribers.
Also, the growth in data revenue (+30.4% y/y), which contributed 40.9% to revenue, was delivered largely through increased usage supported by network expansion for the company and improved smartphone penetration nationally. However, management noted that the harmonization of telecommunication codes in Q2 inhibited data revenue growth as users adjusted to the new codes, amid a 7.0% y/y decline in active data users due to lower gross connections.
During the quarter, total expenses grew by 24.0% y/y (H1-23: +27.8% y/y), owing to the (1) impact of higher consumer price index (CPI) adjustments on lease rental costs; (2) new site rollouts; and (3) rising energy costs.
EBITDA (+23.6% y/y) grew faster than revenue in the quarter, with EBITDA margin printing 52.8%, 16bps higher than the preceding quarter. However, highlighting the increased costs over the HY period, the H1-22 EBITDA margin declined by 58bps to 53.0%.
Net finance costs (+255.3% y/y) rose markedly in Q2-23, following a 256.1% increase in finance costs as net foreign exchange loss (Q2-23: NGN126.82 billion | Q2-22: NGN12.02 billion) was 10.6x the value in the prior period, highlighting the impact of the FX devaluation on MTNN’s finance charge.
Consequently, pre-tax profit declined by 64.3% y/y to NGN44.6 billion in Q2-23. Following an effective tax rate of 38.6% (Q1-22: 32.2%), profit after tax printed NGN27.39 billion (-67.7% y/y).
Business Hilights gathered that the management calls on Tuesday, August 1 at 3.00 pm Nigerian time.
