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Summary of MTN Nigeria unaudited results for the nine months ended 30 September 2019
MTN Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/009584/06)
(Share code MTN)
(ISIN: ZAE000042164)
(“MTN” or “MTN group”)
Summary of MTN Nigeria unaudited results for the nine months ended 30
September 2019
Salient features:
- Mobile subscribers increased by 0.1 million to 61.6 million
- Active data users increased by 1.6 million to 22.3 million
- Service revenue increased by 12.1% to NGN 854.9 billion
- EBITDA grew by 39.3% to N460.1 billion (IAS 17: 15.8% to N382.5
billion)
- EBITDA margin increased by 10.5 pp to 53.7% (IAS 17: 44.7%, up
1.5pp)
- Earnings per share rose by 29% to N7.29k (IAS 17: 36.6% to
N7.72k)
- Capex increased by 39.5% to N154.1 billion (IAS 17: 20.9% to
N133.5 billion)
Unless otherwise stated, financial information is year-on-year (YoY) (the nine-month
period ended 30 September 2019 versus the nine-month period ended 30 September 2018).
Non-financial information is presented quarter-on-quarter (QoQ), or Q319 vs Q219.
MTN Nigeria is one of Africa’s largest providers of communications
services, connecting over 61 million people in communities across the
country with each other and the world. Guided by a vision to lead
the delivery of a bold new digital world, MTN Nigeria’s leadership
position in coverage, capacity and innovation has remained constant
since its launch in 2001. MTN Nigeria is part of the MTN Group – a
multinational telecommunications group which operates in 21 countries
in Africa and the Middle East.
MTN Nigeria Communications Plc (MTN Nigeria) announces its unaudited
results for the nine months ended 30 September 2019. In January 2019,
MTN Nigeria adopted IFRS 16 and adjustments are reflected in the
results.
MTN Nigeria CEO, Ferdi Moolman comments:
“Our performance was very encouraging, demonstrating the resilience
of our business despite a challenging operating environment. We
sustained double-digit growth in service revenue led by growth in
voice and data revenue.
1
We recorded 61.6 million subscribers, representing a 0.1 million
increase QoQ. We were required to undertake a SIM re-registration
process, which resulted in a disconnection of around 0.6 million
active subscribers, limiting base growth.
During the quarter, we focused on the end-to-end optimisation and
repositioning of our data offerings. We made significant investments
in accelerating 4G network expansion; and leveraging 800MHz spectrum
activated in Q2 2019, we launched enhanced 4G+ services in Lagos,
Abuja, and Port-Harcourt. We also changed our pricing strategy,
placing us in an even stronger competitive position going forward. As
a result, we have begun to see promising results with active data
subscriber net additions of 1.6 million and 4G population coverage at
over 35% in 64 cities. Data traffic volume also increased by over 68%,
while data revenue rose by 34.9% yoy.
We continued to sustain EDITDA margin expansion and operating leverage
with EBITDA growth ahead of revenue and inflation at 39.3%, while
growth in profit after tax and earnings per share remained strong at
29% apiece.
During the period, we obtained Platinum accreditation from Investor
in People (IiP), a global body that assesses the people practices of
companies across 75 countries. This achievement reflects the premium
we place on our people, and places MTN Nigeria among the best companies
to work for globally.”
Operational review
Service revenue grew in line with our medium-term double-digit
guidance to N854.9 billion (+12.1% yoy), driven by increases of 10.1%
and 34.9% respectively in voice and data revenue. Voice remains a key
contributor to service revenue at 73.5% (Q3 2018: 74.8%), with its
growth supported by an increase in subscribers, relatively stable
tariffs and our targeted segment offerings using our customer value
management toolkit.
Data contributed 18.0% (Q3 2018: 15.0%) to service revenue, with
strong growth attributable to the recent data price revamp, consumer
education and improved 4G coverage after we obtained access to the
800MHz spectrum in Q2 2019. We recorded a significant increase in both
active data users and the number of smartphones on our network, which
resulted in higher data usage. We added 1.6 million smartphones on
our network, increasing smartphone penetration to 41.7%. The number
of active data subscribers increased by 7.6% to 22.3 million, driving
data traffic growth of 68.9%.
Improving the customer journey and experience on value-added services
(VAS) remains a priority. Following the completion of our VAS
optimization, digital revenue returned to growth on a sequential QoQ
2
basis, recording a 25.7% increase. We continue to focus on building a
sustainable active user base for our digital business.
Our fintech business continued to gain traction with 21.7% YoY growth
in revenue driven by increased adoption of the Xtratime service, which
allows subscribers to borrow airtime. We launched our super-agent
services in August 2019 and recorded 66,000 registered agents, giving
our customers access to financial services. We continue to focus on
expanding the number of agent touchpoints to more towns and cities to
achieve mass adoption; while exploring local remittances across
payment corridors.
Our enterprise1 business segment continued to deliver solid results,
with revenue growth of 28.7% to contribute 12.0% (Q3 2018: 10.5%) to
service revenue.
On an IAS 17 basis, we maintained operating expenses growth below
inflation at 9.3%. This reflects progress with our cost management
initiatives. Consequently, we achieved EBITDA growth ahead of revenue
at 15.8% with a 1.5pp margin improvement to 44.7%. Reported EBITDA
(IFRS 16) rose by 39.3% with a margin of 53.7%. During the period, we
made significant investment in our network to improve service quality
and drive 4G expansion, which resulted in a 3.6pp increase in capex
intensity to 18.0%.
Overall, our bottom-line remained strong with growth of 24.0% and
28.9% respectively in profit before and after tax. Earnings per share
increased by 29.0% to N7.29k.
IFRS 16 and IAS 17 comparison
IFRS 16 as at IAS 17 as at IAS 17 as at
Sep 30, 2019 Sep 30, 2019 Sep 30, 2018
N'm N'm N'm
EBITDA
460,102 382,486 330,204
EBITDA margin, % 53.7% 44.7% 43.2%
Capex
154,062 133,459 110,400
1Enterprise business include revenue from mobile and fixed connectivity, cloud and ICT solutions, and devices. It cuts across voice, data and digital services for
SMEs, public sector and large enterprise customers.
3
AFCF 306,040 249,027 219,804
Profit before tax
212,005 227,079 171,036
Profit after tax
148,324 157,188 115,034
Earnings per share, kobo
729k 772k 565k
(k)
Corporate and legal matters
Appointment of external auditors
- In accordance with the Nigerian Code of Corporate Governance,
PricewaterhouseCoopers was not reappointed at our last Annual
General Meeting held on 8 April 2019, having served as external
auditors for over 10 years. Consequently, in accordance with the
provisions of the Companies and Allied Matters Act, the Board of
Directors appointed Grant Thornton to fill the casual vacancy
created in the role of external auditor and carry out the statutory
audit of the financial statements for the year ending 31 December
2019.
USSD billing
- Our extensive engagements with banks over implementation of end
user billing for USSD-based banking services reflects our
determination to find a solution that is affordable for the consumer
and drives maximum uptake and use of financial services. Banks had
always been on a corporate billing plan that allows them to pay the
USSD access fees at a wholesale price. We view this as an efficient
model that eliminates separate charges by the banks and telecoms
companies, which in the end ensures billing transparency. We
believe that costs associated with USSD banking services should be
charged to the consumer once as with other USSD services we provide.
It is therefore imperative that all parties engage towards a
solution, putting the consumer at the fore of all decisions. MTN
remains committed to the most effective solution for our customers
as we work each day to make their lives easier.
AGF matter
- The hearing on the Attorney General of the Federation (AGF) matter,
which was scheduled to be held on 29 October 2019 was adjourned to
30 and 31 January 2020 for commencement of trial. We remain
resolute that MTN Nigeria has not committed any offence and will
continue to defend this position.
Preference shares redemption
4
- The redemption notice relating to the MTN Nigeria preference shares
remains in place, and we continue to await the completion of the
necessary regulatory process. The preference shares are foreign
currency denominated loan instruments and are exposed to exchange
rate volatility.
Funding
- We are currently exploring financing options, including the
issuance of commercial paper as part of our debt strategy to
diversify our funding sources and optimise overall funding costs.
Outlook
In the remaining quarter of the year, we will continue to prioritise
the expansion of our 4G network coverage and drive active data
subscriber growth. We expect voice and data revenue to continue to
grow on the back of subscriber growth and increasing demand for data
services. We are excited about progress with our digital services
following the completion of VAS optimisation and are focused on
sustaining the QoQ revenue growth we have seen. Having launched our
super-agent services, our goal is to build a network of 100,000 agents
by year-end. Super-Agent has always been a part of our MoMo business
plan and obtaining the licence shows we are on track with our plans.
While we continue to engage with the CBN regarding obtaining a Payment
Service Bank licence, we are fully harnessing opportunities that the
Super-Agent licence brings.
This announcement is only a summary of the information in the full
announcement and does not contain full or complete details. Please
visit https://mtn.com.ni/investors/annual-and-quarterly-financials
for the unaudited results for the nine months ended 30 September
2019.
Fairland
30 October 2019
Lead sponsor
JP Morgan Equities (SA) Proprietary Limited
Joint sponsor
Tamela Holdings Proprietary Limited
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Date: 30/10/2019 08:12:00
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