- Revenue up 17.2 per cent to N385.2 billion
- Fintech revenue rose by 28.5%
- Subscribers down by 5 million to 71.5m
MTN Nigeria said banks are owing it N40.3 billion as at the end of first quarter 2021 even as it reported its digital revenue grew by 101.0% and fintech revenue by 28.5% as customers continued to adopt more digital products and services, a trend accelerated by the pandemic.
According to its financial reports for the first quarter ended March 31, 2021, sent to SiliconNigeria, it had 449,100 registered mobile money (MoMo) agents and 4.6 million fintech customers.
MTN Nigeria CEO, Karl Toriola said, “As at the end of Q1, N40.3 billion was due to MTN Nigeria. In the meantime, we continue to account for USSD revenue on a cash basis.
“We continue to engage with the NCC, Central Bank of Nigeria (CBN) and deposit money banks (DMBs) to conclude the operational modalities for the new pricing framework that has been agreed upon for USSD services. The mechanism for and timing of the recovery of the industry-wide outstanding debts that exist for USSD services provided to the DMBs form part of this process,” he said.
Toriola said the enterprise business continued its recovery from the impacts of the COVID-19 lockdown as economic activity improved. However, service revenue for enterprise was largely flat YoY, mainly due to the non-recognition of USSD revenue in Q1. Normalised growth (excluding USSD revenue) was 2.6%.
“Our digital business continued to gain traction with the uptake of our products and services and the structural turnaround in the business. As a result, digital revenue rose by 101.0%, supported by our rich media and value-added services, while our active user base was largely flat at 2.8 million,” he said.
“Fintech revenue rose by 28.5%, driven by increased adoption of Xtratime and our core fintech services. We continue to expand our MoMo agent network and broaden our service offerings to include assisted withdrawal irrespective of the bank where the account is domiciled. Our registered MoMo agents increased by 54,000 to 449,146. The volume of transactions processed was over 24 million in the quarter, up more than four times YoY, from an active base of 4.6 million subscribers.
MTN reported that its service revenue increased by 17.2 per cent to N385.2 billion while earnings before interest, tax, depreciation, and amortisation (EBITDA) grew by 19.1 per cent to N204.5 billion. However, mobile subscribers declined by five million to 71.5 million in the first quarter of this year due to customer churn and the regulatory restrictions on new SIM sales and activations.
MTN’s ability to drive service revenue growth while managing the growth in expenses resulted in an acceleration in EBITDA growth to 19.1% and EBITDA margin expansion of 0.9pp to 53.1% YoY. This enabled profit before tax (PBT) and profit after tax (PAT) growth of 33.9% and 42.5% respectively.
MTN’s voice revenue grew by 8.0%, supported by an 8.7% increase in traffic and our customer value management initiatives. The impact on voice revenue of the industry-wide suspension of new SIM registration in mid-December was partly offset by increased usage by active SIMs in our base and migration to a higher quality of experience.
Data revenue maintained the positive momentum from Q4 2020, rising by 42.6% YoY. This was led by increased usage and traffic, supported by 4G penetration and increased network capacity following the acquisition and activation of an additional 800MHz spectrum in March 2021. In line with its 4G acceleration, the 4G network now covers 61.8% of the population, up from 60.1% in December 2020.
MTN Nigeria added approximately 1.2 million new smartphones to the network, bringing smartphone penetration to 47.5% of its base, up from 45.9% in 2020.
On SIM card registration,more than 35 million subscribers have submitted their NINs as at 30 April 2021, representing approximately 50 per cent of our subscriber base and 63 per cent of service revenue, MTN said. It is also actively supporting the Government’s NIN enrolment programme, with 182 points of enrolment active across the country.
“We continue to collaborate with the Nigerian Communications Commission (NCC) and the Nigerian Identity Management Commission (NIMC) to update subscriber records with the National Identity Number (NIN). We are working with NIMC to increase the enrolment centres to provide an access point for as many Nigerian as possible,” added Toriola.
Capital expenditure in the quarter was N89.9 billion, up 19.3% mainly due to site rollouts, while free cash flow increased by 18.9% to N114.7 billion. MTN’s core capex excluding right of use assets was up 27.8% to N31.6 billion. Depreciation and amortisation rose by 16.8% due to the impacts of Naira depreciation and a 2.5pp increase in value added tax in February 2020.
MTN recorded a 10.5pp reduction in our overall cost of funding, despite higher borrowings, leading to a 10.6% decline in net finance costs. This was enabled by a 95% reduction in the reference benchmark rate to 0.6%. Overall, it recorded a PBT growth of 33.9%, while PAT rose by 42.5% due to the release of an overprovision in deferred tax in the prior year.
Covid-19 Support
“We made good progress in the first quarter of 2021 despite the continued impact of the COVID-19 pandemic. We continue to prioritise the safeguards put in place to protect the health and well-being of our people, customers and stakeholders and to control the spread of the virus while ensuring network resilience and efficiency. As part of our Y’ello Hope initiatives, we continue to support Government’s efforts in combatting the COVID-19 pandemic.
“We supported the most vulnerable in our communities, providing them with free-to-access services (including SMS and data) as well as essential medical supplies (tests and personal protective equipment). We continue to support the Coalition Against COVID-19 (CACOVID) that has driven multiple initiatives, such as building isolation centres across the country. MTN Nigeria also paid taxes early in support of Government’s ongoing efforts. In addition, our REVV support programme for Micro, Small and Medium Enterprises (MSME) helps them navigate the new digital reality,” said the MTN CEO.
Outlook
MTN’s 2021 priorities remain unchanged, with a clear focus on sustaining double-digit revenue growth, driving 4G network expansion and positioning our fintech business for accelerated growth in order to unlock its full value. “The acquisition of additional 800MHz spectrum positions us to deliver improved service speeds to Nigerians in support of the Government’s broadband initiative.
“We will continue to sustain our expense efficiency programme to strengthen our financial position and support margins. We remain in dialogue with the DMBs on a pricing option for airtime sales commission while diversifying our airtime recharge channels to offer our subscribers more options to purchase airtime and stay connected.
He said MTN will pursue stronger and deeper stakeholder relationship and enhanced shared value across its stakeholder ecosystem while ensuring that the operator’s activities align with the Government’s development agenda. “Environmental, social and governance (ESG) principles remain at the core of everything we do, with a focus on aligning our priorities to drive eco-responsibility, sustainable society, sound governance and economic value for all in Nigeria,” Toriola concluded.
