MTN investors wary as Nigeria and power cuts weigh on outlook
Telecom giant says performance of its biggest and most lucrative market was driven by data, fintech and digital services
01 February 2023 - 12:09
byAndries Mahlangu and Mudiwa Gavaza
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MTN shares dipped on Wednesday as the impact of regulation on its Nigerian subscriber base and power cuts in SA continued to weigh on sentiment.
In April 2022, the Nigeria Communications Commission said all operators are required to restrict outgoing calls of subscribers whose SIMs are not yet linked with its national identity number (NIN), which is similar to SA’s ID system. For wary investors, the registration programme has conjured up memories of previous clashes with Nigerian authorities that hammered MTN’s share price.
Africa’s largest mobile operator has been working to fix the issue and get more of its customers registered with the new system. It has set up close to 10,000 of these in the country to help subscribers with enrolment.
“We will continue to ramp up gross connections and implement our NIN recovery initiatives to grow the subscriber base,” MTN Nigeria CEO Karl Toriola told investors as the company released its full earnings report for 2022.
Efforts around registrations appear to be paying off as mobile subscribers rose 10.5% to 75.6-million while active data users gained 15.3% to 39.5-million.
MTN Nigeria reported a 21.5% rise in annual service revenue, with data, fintech and digital services in particular firing on all cylinders.
Data revenue jumped 47% as a result of growth in active data users and data usage after the company expanded its 4G network to cater to growing data traffic. Data traffic jumped 66.6%, of which 79.5% was carried on the 4G network. Core profit rose 22% year on year.
Fintech revenue rose 19.6% as airtime lending products rose 18% and core fintech services more than tripled.
The number of fintech users rose 57.5% to 14.9-million, of which about 2-million represent are active on the MoMo mobile payments platform.
Nigeria is the Johannesburg-based telecom group’s biggest and most lucrative market. However, since the lion’s share of that country’s fiscal revenues come from sales of crude oil, MTN’s share price is sensitive to movements in international oil prices.
Shares in parent MTN Group closed 2% lower at R143.80 on the JSE on Wednesday.
Rival Vodacom was down 0.25%, while Telkom closed 1.1% higher.
Unum Capital’s Lester Davids noted earlier in the week that sentiment around local telecom providers continues to be hampered by the cost of load-shedding on operations.
The number of registered MoMo wallets since its launch in May 2022 was 13.2-million, MTN Nigeria said in a results statement for the year to end-December.
Digital revenue grew 64% as the “adoption of our digital products continues to grow with user journey optimisation and the growth of the active base, up 37.5% to 10.3-million”, the company said.
“Our rich media services, mobile advertising and content (value-added services) continue to drive revenue growth. Our instant messaging platform, ayoba, accounted for half of our active users.”
Voice revenue rose 6.8%, bucking the slower growth trend of general voice traffic as data usage continues to increase.
Update: February 1 2022 This story has been updated with company comment and closing share price.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
MTN investors wary as Nigeria and power cuts weigh on outlook
Telecom giant says performance of its biggest and most lucrative market was driven by data, fintech and digital services
MTN shares dipped on Wednesday as the impact of regulation on its Nigerian subscriber base and power cuts in SA continued to weigh on sentiment.
In April 2022, the Nigeria Communications Commission said all operators are required to restrict outgoing calls of subscribers whose SIMs are not yet linked with its national identity number (NIN), which is similar to SA’s ID system. For wary investors, the registration programme has conjured up memories of previous clashes with Nigerian authorities that hammered MTN’s share price.
Africa’s largest mobile operator has been working to fix the issue and get more of its customers registered with the new system. It has set up close to 10,000 of these in the country to help subscribers with enrolment.
“We will continue to ramp up gross connections and implement our NIN recovery initiatives to grow the subscriber base,” MTN Nigeria CEO Karl Toriola told investors as the company released its full earnings report for 2022.
Efforts around registrations appear to be paying off as mobile subscribers rose 10.5% to 75.6-million while active data users gained 15.3% to 39.5-million.
MTN Nigeria reported a 21.5% rise in annual service revenue, with data, fintech and digital services in particular firing on all cylinders.
Data revenue jumped 47% as a result of growth in active data users and data usage after the company expanded its 4G network to cater to growing data traffic. Data traffic jumped 66.6%, of which 79.5% was carried on the 4G network. Core profit rose 22% year on year.
Fintech revenue rose 19.6% as airtime lending products rose 18% and core fintech services more than tripled.
The number of fintech users rose 57.5% to 14.9-million, of which about 2-million represent are active on the MoMo mobile payments platform.
Nigeria is the Johannesburg-based telecom group’s biggest and most lucrative market. However, since the lion’s share of that country’s fiscal revenues come from sales of crude oil, MTN’s share price is sensitive to movements in international oil prices.
Shares in parent MTN Group closed 2% lower at R143.80 on the JSE on Wednesday.
Rival Vodacom was down 0.25%, while Telkom closed 1.1% higher.
Unum Capital’s Lester Davids noted earlier in the week that sentiment around local telecom providers continues to be hampered by the cost of load-shedding on operations.
The number of registered MoMo wallets since its launch in May 2022 was 13.2-million, MTN Nigeria said in a results statement for the year to end-December.
Digital revenue grew 64% as the “adoption of our digital products continues to grow with user journey optimisation and the growth of the active base, up 37.5% to 10.3-million”, the company said.
“Our rich media services, mobile advertising and content (value-added services) continue to drive revenue growth. Our instant messaging platform, ayoba, accounted for half of our active users.”
Voice revenue rose 6.8%, bucking the slower growth trend of general voice traffic as data usage continues to increase.
Update: February 1 2022
This story has been updated with company comment and closing share price.
mahlangua@businesslive.co.za
gavazam@businesslive.co.za
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