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MTN Nigeria’s Fintech Grows 48.2% As Revenue Tops N790.3bn in H1

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MTN Nigeria Communications Plc (MTN Nigeria) has announced its unaudited results for the half-year ended 30 June 2021, as well as plans to celebrate its 20th anniversary with numerous national impact projects with Fintech revenue rising by 48.2%, driven by increased adoption of Xtratime and core fintech services.

The telco said it will continue to expand its MoMo agent network and broaden its service offerings. MTN’s registered MoMo agents increased by 121,000 in H1 2021 to more than 515,000. Transaction volume increased by 280.8% YoY to 55.6 million in H1 2021, and active subscriber base is now more than 6.1 million, up 180.0% YoY.

Speaking on the results, MTN Nigeria CEO Karl Toriola said MTN’s digital business continued to gain traction on the back of strong partner ecosystem and the uptake of MTN’s products and services. “Digital revenue rose by 61.8%, also supported by our rich media and value-added services. Our active user base rose by 38.0% to over 3.9 million, led by Ayoba – our instant messaging platform – with more than 2.3 million active users.”

He said the enterprise business revenue increased by 6.0%, demonstrating the continued recovery from the impact of the COVID-19 lockdown and the uptake of MTN’s services by the businesses its serve. “We have made significant progress in concluding the operational modalities for the new pricing framework for USSD services, which incorporates the recovery of outstanding USSD debts.

“We continue to pursue and realise efficiency through cost discipline and enhanced digitisation. However, due to an accelerated site rollout, the effects of Naira depreciation on lease rental costs and Covid-19 related expenditure, operating expenses increased by 24.6%. Our continued ability to drive operating leverage helped to drive EBITDA growth to 27.6%, with a 1.4pp expansion in our EBITDA margin to 52.7%.”

Service revenue grew by 24.1% YoY, driven by the sustained growth in data and also partly due to the lower base in comparative 2020 voice revenue that resulted from lockdowns during that period.

Voice revenue grew by 13.1%, benefitting from an 11.8% increase in traffic and our customer value management (CVM) initiatives. The impact on voice revenue from the industry-wide suspension of new SIM registration was partly offset by higher usage in our active SIM base as well as migration to a higher quality of experience.

Data revenue continued the positive momentum from H2 2020, rising by 48.3%. This was driven by increased usage from the existing base, supported by the acceleration in our 4G rollout and enhanced network capacity following the acquisition and activation of additional 800MHz spectrum in Q1. Data traffic rose by 83.0% YoY, while smartphone penetration was up by 5.8pp to 49.3%. Our 4G network now covers 65.1% of the population, up from 60.1% in December 2020.

According to him, capital expenditure in the period was 39.1% higher to N186.4 billion, as MTN continued to invest in its network to maintain service quality and aggressively expand footprint in terms of 4G and rural coverage. “We recorded a healthy free cash flow of N230.8 billion, up by 19.6%. Despite a 50.6% increase in core capex excluding right of use assets to N114.5 billion, capex intensity remained within target levels at 14.5%. Depreciation and amortisation rose by 17.1% and net finance cost was down by 9.8%, resulting from a lower average cost of borrowings. Overall, we recorded a PBT growth of 54.1%, also reflecting the softer base of H1 2020.”

N3bn to CACOVID

Commenting further, Toriola said: “In the first half of 2021, we made good progress strengthening the resilience of the business, managing the impact of the COVID-19 pandemic and enhancing support to our people, customers and other stakeholders. We extended our commitment to the Coalition Against Covid-19 (CACOVID) with an additional N3 billion contribution over a two-year period, half of which has already been paid. This is in support of efforts to promote the health and security of Nigerians, as we navigate our way through the pandemic; and in line with our Y’ello Hope initiatives through which we provided support to our broad base of stakeholders to the value of approximately N25 billion in 2020.

“Our progress towards achieving greater business resilience is reflected in the upgrade by Global Credit Ratings (GCR) of our national scale long-term issuer rating to AAA and affirmation of our national scale short-term rating of A1+ with a stable outlook. This puts MTN Nigeria on the highest possible GCR scale for short-term and long-term ratings, providing a solid platform for growth.

20 years anniversary

“2021 marks the 20th anniversary of MTN’s presence in Nigeria. As we celebrate this milestone, we are pleased to announce that our Board of Directors has approved our participation in the Road Infrastructure Tax Credit (RITC) Scheme. This is in response to Government’s drive towards public-private partnerships in the rehabilitation of critical road infrastructure in Nigeria. We intend to participate in the restoration and refurbishment of the Enugu-Onitsha Expressway. Conversations in this regard have already commenced, and further announcements will be made in due course.

MTN’s New Head Office

“In line with our desire to plant deeper and more permanent roots in Nigeria, we have also initiated plans to commission a purpose-built, state of the art MTN Head Office, designed to act as a central hub for our network, a catalyst for creativity and innovation, and a showcase for the flexible working structures that are driving efficiency gains in this new normal working environment. Aligned with our wider commitment to environmental sustainability, it will meet the highest global environmental standards, demonstrating the role of green technology in our future.

14% Equity Sell to Nigerians

Following MTN Group’s stated intention to sell down up to 14% of its investment in MTN Nigeria, subject to market conditions over the medium-term, MTN Nigeria’s shareholders approved an equity shelf programme at the last Annual General Meeting. This will facilitate a process to increase ownership of the Company by more Nigerian retail and institutional investors. Alongside this, we further localised our predominantly Nigerian management team with the appointment of Nigerians to two key senior positions (Chief Marketing Officer and Chief Information Officer) previously held by expatriates.

N600bn broadband Investment

MTN Nigeria continues to invest in improved world class services and its network, accelerating the expansion of our 4G coverage and providing home broadband. As part of our rural connectivity programme, we plan to connect approximately 1,000 rural communities to our network this year with additional 2,000 communities in 2022. We are delighted that these are translating into strong operational performance in line with the objectives of Ambition 2025. In the next 3 years, we will invest over N600 billion to expand broadband access across the country in support of Government’s Broadband Plan.

Operationally, our mobile subscribers closed H1 at 68.9 million, down 9.9% from December 2020. This was due to the regulatory restrictions on new SIM sales and activations, which was lifted on 19 April 2021. Although the initial run-rate of additions has been slower than usual due to new process requirements, we anticipate growth to normalise in the short-term as more of our acquisition centres are certified for SIM registration.

Finally, our Board of Directors has approved an interim dividend of N4.55 kobo per share to be paid out of distributable net income. This represents a growth of 30% over N3.50 kobo per share paid in H1 2020.”

New SIM Registration Requirement

We are actively supporting the Government’s NIN enrolment programme with more than 380 points of enrolment active across the country. We are working with National Identity Management Commission (NIMC) to complete bulk verification of the National Identity Numbers (NINs) collected and increase the enrolment centres to provide an access point for as many Nigerian as possible. To this end, we have acquired over 40,000 enrolment devices, which are being configured for this purpose. As of 26 July 2021, approximately 37 million subscribers have submitted their NINs, representing around 54% of our subscriber base and 65% of service revenue. The deadline for NIN verification has been extended to 31 October 2021.

Outlook

To enable us to continue to take advantage of emerging opportunities, we have refined our strategy. The new strategy called Ambition 2025 is closely aligned with that of MTN Group and is built on four key strategic priorities: build the largest and most valuable platforms, drive industry-leading connectivity operations, create shared value and accelerate portfolio transformation. These priorities will define our focus for the next five years. Taking advantage of MTN’s existing platforms and assets, we are well-positioned to accelerate long term growth as we continue to monitor and manage the impacts of the pandemic.

We have a clear focus on sustaining double-digit service revenue growth ahead of inflation, driving 4G and rural network expansion, as well as positioning our fintech and digital businesses for accelerated growth in order to unlock their full value. In addition, we will continue to sustain our expense efficiency programme to strengthen our financial position and support margins. In the remainder of the year, we anticipate that the base effects will partly influence our commercial and financial trends. Although the availability of foreign exchange remains a constraint, we strive to minimise its impact on the business.

We are driving a positive culture change across the organisation to enhance productivity and further improve performance. We maintain our strong focus on deeper, proactive and inclusive engagements to drive shared value for all stakeholders, while ensuring that our activities align with and contribute to the Government’s development agenda.

Finally, emerging trends indicate a steady recovery in economic activity. However, given the ongoing uncertainties presented by the new wave of the COVID-19 outbreak and the NIN registration exercise, we remain mindful of changes to the operating environment as the rest of the year unfolds, concluded Toriola.

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Cover Story

Visa Unveils Africa Fintech Accelerator Program to Kickstart $1bn Investment

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Visa has announced the launch of the new Visa Africa Fintech Accelerator program to help enable Africa’s expanding start-up community through expertise, connections, technology, and investment funding. 

The launch of the Africa Fintech Accelerator program follows Visa’s recent pledge to invest $1 billion in Africa’s digital transformation and its long-term commitment to advancing Africa’s economies and driving inclusive growth.

The initiative was introduced by Visa Executive Chairman Alfred F. Kelly Jr. at Bloomberg New Economy Gateway Africa in Marrakech, Morocco.

The Visa Africa Fintech Accelerator will enable up to 40 start-ups each year to accelerate and grow through a three-month intensive learning program focused on business growth and mentoring.

Following the program completion, Visa intends to further support fintech growth with capital investment in select participating businesses, while accelerating their commercial launch through access to Visa technology and capabilities.

Fintech startups throughout Africa can apply to be part of the program through two application phases each year, starting from July 2023. With more than 1,000 Africa Fintech start-ups taking part in the Visa Everywhere Initiative* (VEI) competition in 2022, finalists from Africa country editions this year will be invited to join the accelerator program.

“Africa has one of the most exciting and admired fintech ecosystems in the world, bringing outstanding entrepreneurial talent to a young digital-first population that is growing fast,” said Alfred F Kelly Jr., Executive Chairman, Visa, Inc. “Visa has been increasing our investments in Africa for decades and strengthening partnerships throughout the continent to support the next wave of innovation and growth.  Our new Fintech Accelerator will bring expertise, connections, and investment to Africa’s best fintech start-ups so they can grow at scale.”

The support for participating fintechs will help further strengthen the payment ecosystem by fast-tracking new innovations and technologies that provide solutions to challenges that are unique to the African continent, and which can further advance Africa’s digitization. In line with Visa’s corporate purpose to uplift everyone, everywhere by being the best way to pay and be paid, this support of Africa’s fintechs will facilitate additional opportunities to expand financial inclusion.

“Africa’s fintech community is at the forefront of payments innovation and connecting more of the unbanked with access to the digital economy,” said Otto Williams, Head of Partnerships, Products and Solutions, Central Europe, Middle East and Africa, Visa. “Visa has been working with this innovative community to create new programs and solutions to help fintechs scale, while giving access to Visa’s technology and partner ecosystem.  Through the new Visa Africa Fintech Accelerator, we are looking forward to working with more brilliant entrepreneurs and companies to shape the future of money.”

In addition to its $1 billion pledge to Africa, Visa has recently introduced several business initiatives and programs to further advance the payments ecosystem in Africa.  These include:

  • Establishing local operations in the Democratic Republic of Congo, Ethiopia and Sudan to help support and strengthen the local financial ecosystem. Visa has 10 offices across Africa from which it supports payments in all 54 countries.
  • Unveiling the first dedicated Visa Sub-Saharan Africa Innovation Studio, in Nairobi, Kenya, to provide a state-of-the-art environment to bring together clients and partners to co-create future-ready payment and commerce solutions.
  • Introducing and expanding new technologies that help African consumers and merchants make and receive digital payments, such as Tap to Phone to turn a simple mobile phone into point-of-sale terminal, as well as lowering remittance costs through innovative solutions like Visa Direct.
  • Establishing Visa as the fintech partner of choice, working with innovators and entrepreneurs, including through the Visa Everywhere Initiative program, with dedicated country programs in South Africa, Kenya and Egypt.
  • Launching new programs to support women’s empowerment together with financial partners, including She’s Next, which is bringing funding, mentoring and networking opportunities to female entrepreneurs leading growing SMBs in Egypt, Kenya, Morocco, and South Africa.
  • Collaborating, with partners, to advance financial literacy in several languages, including localized versions of Practical Money Skills in Egypt and Morocco for the first time.

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Nigeria’s Telecom Access Gaps Drop by 53%

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The number of identified areas of clusters across Nigeria without access to the telecommunications services has been reduced by 53.1 per cent as at the end of 2022.

The Executive Vice Chairman and Chief Executive Officer of the Commission, Prof. Umar Garba Danbatta, disclosed this at a recent telecoms industry stakeholders forum in Yenagoa, Bayelsa state.

Danbatta, who was represented at the forum by the Head, Pre-Licensing at the Commission, Usman Mamman, said from 207 clusters of access gaps in 2013, the industry has witnessed a reduction to 97 as of end 2022 by bridging 110 clusters of access gaps, representing a 53.1 per cent reduction.

He said by implication, the number of Nigerians who fell within the access gap which were estimated at 37 million in 2013 has been reduced to 27 million, following increased access to telecoms services by those hitherto not digitally included.

Access gaps refer to the cluster of communities or grouped areas in different parts of the country that are bereft of access to telecom services and till date, the NCC has reduced clusters of access gap by more than half.

Danbatta said, “We have worked tirelessly to ensure we bring telecom services to people living in rural, unserved, and underserved areas of this country, totalling 37 million people courtesy of the consultancy that was conducted in 2013.

“By 2019, we had succeeded in reducing the clusters of access gaps to 114 through the deployment of the necessary infrastructure needed to bring services to people living in rural, unserved and underserved areas of the country. The deployment of infrastructure is in terms of base transceiver stations, which resulted in the reduction of Nigerians in those clusters from 37 million to 31 million in 2019.

“By 2022, we have reduced the clusters of access gaps to 97 from 207 in 2013. The number of Nigerians again have come down from 37 million in 2013 to 27 million as we speak. We achieved this by deploying, from 2009 to 2011, a total of 79 new base transceiver stations,” he said

Danbatta stated that in 2013 to 2018, the telecom sector also witnessed the deployment of additional 124 base transceiver stations while from 2019 to 2022, a total of 364 base transceiver stations were deployed.

“So far, the total number of base transceiver stations we have deployed to date between the time the access gaps were identified till the end of 2022 are 567,” he said.

While describing the reduction in access gap so far as a landmark, Danbatta, however, said the Commission will not rest on its oars as it thrives to ensure that the remaining 27 million Nigerians, who currently lack access to telecoms services, are provided with services.

Meanwhile, the EVC said part the regulatory interventions of the Commission to bridge the remaining 97 access across the country to provide ubiquitous connectivity in all the nooks and crannies of Nigeria are the issuance of the Mobile Virtual Network Operator (MVNO) Licences and the deployment of Fifth Generation (5G) networks, among others.

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NCC Grants Routelink MVNO License

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The Nigerian Communications Commission has granted Routelink a Mobile Virtual Network Operating License.

The Mobile Virtual Operators’ License MVNO license is a new mobile license category in Nigeria aimed at bridging the gap between the Unserved and the Underserved in the society. The MVNO license is the third license to Routelink from NCC.

 THe group managing director of Routelink Group, Mr. Femi Adeoti said that the NCC granted this license to Routelink based on the perception of what it is  set to do in the market.

MVNOs are carriers that don’t have their own wireless network but instead, they piggyback off another carrier’s platform for coverage through their cell phone plans.

It is a new license category in Nigeria and the ultimate beneficiaries are the subscribers as it would translate into lower costs, more service options, and better quality of service.

“Routelink is excited about the opportunities that abound in the Nigerian telecom marketplace and is determined to make a major difference as regards quality of service and innovation,’’ Femi Adeoti said.

In its drive to create an enabling environment, the NCC has introduced the Mobile Virtual Network Operators (MVNOs) License that will generate employment and bridge the gap between the unserved and the Underserved in Society. It will also further engender competition and provide choices for telecommunication consumers.

 The.managing director of Routelink Telecom, Mr. Ikechukwu Nguzo said that the introduction of MVNOs in Nigeria has the potential to stimulate growth in the Nigerian telecom industry and benefit consumers in a number of ways, including coverage expansion, more innovative services, improved service offerings, and partnership opportunities.

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MVNOs have continued to gain traction across the world, with the increase in mobile phone users globally. The increased usage of smartphones and mobile data services, as well as the growing preference for flexible and customized mobile services, are primarily responsible for the growth.

However, the success of MVNOs in Nigeria would depend on various factors such as regulatory policies, infrastructure availability, and market demand.

Routelink Telecom provides advanced switching infrastructure and highly reliable Clearing House and Voice Gateway services to major Mobile Network Operators in Nigeria and International partners.

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