This was delivered through solid commercial momentum and the ongoing execution of the MTN Group’s Ambition 2025 strategy despite challenging trading conditions.
Voice revenue grew by 5.8% as MTN Nigeria recorded increased gross connections and higher usage from the active SIM base.
This was enabled by the technology company’s expanded customer acquisition touchpoints and rural telephony initiatives, as well as the enhanced customer value management (CVM) toolkit, which reduced the impact of the SIM registration and activation restrictions.
Data revenue rose by 54.0%, maintaining the accelerated growth trajectory through growth in subscriber base and data usage.
This, according to Karl Toriola, CEO MTN Nigeria, was sustained by an aggressive 4G network expansion and enhanced quality and capacity of the network to support rising data traffic.
Data traffic rose by 84.8% YoY and usage (MB per user) by 69.8%
In addition, MTN Nigeria added about a million new smartphones to the network in Q1, bringing smartphone penetration to 50.0%.
As a result, the 4G network now covers 71.7% of the population, up from 70.3% in December 2021.
“We continue to drive home broadband penetration, reaching over 775k users, up by over 160k in Q1. Our goal is to Own the Home through differentiated value propositions, creating experiences that position MTN as the broadband service provider of choice. We are leveraging our unique assets and capabilities to capture a significant share of market growth”, the company said.
Fintech revenue rose by 46.5% on the back of the growing adoption of the fintech services and expanded user base.
MTN is also promising continued expansion on the MoMo agent network with more than 800k registered agents and over 166,000 active agents (agents who perform a minimum of ten revenue-generating transactions within 30 days).
“Having established a significant foundation of registered agent network,” Toriola said, “we are now focusing on scaling the active base. We have expanded our agent services to include card withdrawal services by deploying point of sales (POS) terminals to the agent network. This has contributed to growing our total volume of transactions to over 56.1 million, up 132.7% YoY, by more than 10.7 million active users (up 135.2%)”.
Digital revenue grew by 35.3%. This shows that increased penetration of MTN Nigeria’s digital products, driven by increased usage from the active base.
“We have reached 7.4 million digital subscriptions (up 164.1% YoY), with ayoba accounting for 45% of the subscriptions and Rich Media accounting for 55%”, he said.
Revenue from digital services was driven by Rich Media, Mobile Advertising and Content VAS.
“We are transforming our Y’ello Digital Platforms into a one-stop destination that caters to all consumer segments.
“Revenue from the enterprise business rose by 34.3%, underpinned by the onboarding of new customers across segments and the uptake of our enhanced services. Our enterprise business is transitioning from product to platform while leveraging core mobile and fixed connectivity to serve customers across all segments better.
“We have commenced executing programs to digitise and transform micro, small and medium enterprises (MSMEs) in Nigeria. Key among these is developing a cloud technology marketplace to empower, educate and enrich MSMEs. Our goal is to drive further adoption of enterprise platforms (internet of things and cloud), creating additional value for our customers and enabling them to innovate while remaining profitable”, the CEO explained.
Value-based capital allocation drives efficiency and improves margins
“We continue to progress with our expense efficiency programme (through which we realised N6.3 billion in Q1) and remain disciplined with capital allocation. As a result, we contained the 15.7% increase in operating expenses below the rate of inflation in Nigeria. This was achieved despite the ongoing effects of Naira depreciation on lease rental costs and acceleration in our site rollout. Consequently, our ability to drive operating leverage has enabled EBITDA growth of 25.7% and the expansion of our EBITDA margin by 1.5pp to 54.6%.
“Depreciation and amortisation rose by 8.9%, resulting from increased site rollout, while net finance costs increased by 18.7% on higher borrowings. Profit before tax (PBT) consequently increased by 39.4%. Taxation increased by 59.9% due to the PBT growth, the net movement in deferred tax provisions, and the education tax rate increase to 2.5%. These led to a 31.1% increase in PAT.
“Capital expenditure in the period was up by 80.8% off a lower base in Q1 2021 and aggressive coverage expansion to capture growth opportunities, focusing on the 4G network and rural telephony programme. We are also frontloading some of our capex plan for the year as part of risk mitigation on supply chain disruption.
“Core capex, excluding the right of use assets, increased by 156.8%, with capex intensity of 17.2% remaining within target levels. We deployed 2,260 4G sites, representing approximately 85% of the total sites deployed during the period and reflecting solid data revenue growth.
“The higher capex resulted in a 17.4% decline in free cash flow to N94.7 billion. However, we expect this to improve as the capex run-rate moderates over the year.
“In April 2022, we tapped into the debt market to raise N127 billion through commercial paper issuance. This aligns with our strategy to diversify our financing options, with the proceeds being deployed towards working capital and general corporate purposes.
“Overall, our funding and liquidity remain well-managed, supported by our cash flows and approved facilities. Our debt metrics remain well within our financial covenants, and we can comfortably meet our operational, financial and capex investment obligations. In addition, our foreign currency exposure is within manageable limits, with 92% of our debt in local currency, so that our balance sheet can withstand currency volatility”.