MTN Nigeria Communications Plc (MTNN) has unveiled its unaudited financial results for the third quarter of 2024 (Q3-24), revealing a staggering 65.6% year-on-year decline in pre-tax profit, amounting to NGN 37.66 billion. The company’s profit after tax fell sharply by 94.2% year-on-year to NGN 4.13 billion, following a significant tax expense of NGN 33.53 billion.
In this quarter, MTNN reported a standalone profit after tax of NGN 4.13 billion, representing a 94.2% decline compared to the same period last year, with earnings per share (EPS) at NGN 0.20. This marks the first positive EPS since Q3-23 (NGN 3.41). Consequently, the nine-month (9M-24) loss per share stood at NGN 24.51, compared to a loss per share of NGN 0.68 in 9M-23.
Despite the profit decline, the company's service revenue exhibited a strong growth of 35.4% year-on-year in Q3-24, with a year-to-date (9M-24) increase of 33.6%. This growth was driven by robust performance across all business segments: Voice revenue grew by 16.9% (accounting for 38.1% of total revenue), Data revenue surged by 48.3% (39.9% of revenue), Digital services skyrocketed by 109.9% (2.4% of revenue), Fintech revenue rose by 32.3% (3.4% of revenue), and other services increased by 62.6% (5.6% of revenue).
The management credited the increase in voice revenue to a higher volume of subscriber minutes and effective customer value management initiatives, even as the subscriber base decreased by 0.8% year-on-year to 77 million due to the Nigerian Communications Commission's (NCC) directive on NIN-SIM linkage, resulting in a net loss of 2.4 million subscribers in Q3-24.
Data revenue growth was spurred by increased usage, with average data consumption per customer rising by 31.2% year-on-year to 11.2 GB and total data traffic expanding by 42.1% in 9M-24. The company added approximately 1 million new home broadband subscribers, although the total data subscriber base dropped by 300,000 to 45.3 million in Q3-24, also affected by the NIN-SIM directive.
Moreover, MTNN's value-added services, particularly digital and fintech offerings, gained traction, with the mobile money (MoMo) segment experiencing a 16.6% year-on-year increase in transaction volume despite an 81.5% reduction in the agent network, as the company focused on optimizing service delivery.
Operating expenses surged by 76.4% year-on-year, outpacing revenue growth and leading to a 10.19 percentage points contraction in the EBITDA margin to 37.6%. The increase in operating costs is attributed to ongoing currency pressures, a highly inflationary environment, and elevated energy costs. However, there was a notable improvement in the EBITDA margin, which expanded by 570 basis points quarter-on-quarter—the first expansion since Q4-23—thanks to renegotiated tower lease contracts that generated cost savings of approximately NGN 54 billion.
Net finance costs climbed 73.1% year-on-year in Q3-24, driven by a 94% rise in finance costs, reflecting higher interest expenses on leases and borrowings amid a challenging interest rate environment and naira depreciation. Although net foreign exchange losses decreased by 11.9% year-on-year in Q3-24, they surged by 90.8% year-on-year for the nine-month period, primarily due to significant exchange losses recorded in Q1-24.
MTN Nigeria's financial performance for Q3-24 shows a considerable decline in profits, contrasting with notable growth in service revenues, indicating the complexities of navigating a challenging economic landscape.
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