… Blames Decline On SIM Sales & Activation Ban
MTN Nigeria Communications Plc (MTN Nigeria) has announced its unaudited results for the quarter ended March 31, 2021, with indications that the telco’s mobile subscribers declined by 5 million to 71.5 million due to the effects of customer churn and the regulatory restrictions on new SIM sales and activations. The result also showed that NTN Nigeria had a marginal decline in active data users by 71,000 to 32.5 million; while service revenue increased by 17.2% to N385.2 billion and earnings before interest, tax, depreciation, and amortisation (EBITDA) grew by 19.1% to N204.5 billion.
The result further indicates that EBITDA margin increased by 0.9 percentage points (pp) to 53.1% while capital expenditure (CAPEX) was up by 19.3% to N89.9 billion, up 27.8% to N31.6 billion excluding right of use [RoU] assets. Profit before tax grew by 33.9% to N102.9 billion and earnings per share rose by 42.5% to N3.60 kobo
Speaking on the result, MTN Nigeria CEO, Karl Toriola said: “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.”
He explains further: “Operationally, service revenue in Q1 grew by 17.2% YoY, in line with our medium-term target, supported by growth of 42.6% and 8.0% in data and voice revenue respectively. This was achieved despite the impact of the pandemic and a decline in our subscriber base due to the effects of customer churn and the restrictions on new SIM sales and activations arising from changes in SIM registration regulations. 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).”
The improvement in data services was supported by the completion of our acquisition and activation of an additional 800MHz spectrum, enabling us to further increase traffic by 10% and enhance throughput by 79%.
Toriola noted that as at April 30, 2021, more than 35 million subscribers have submitted their NINs, representing approximately 50% of MTN Nigerian subscriber base and 63% of service revenue.
He spoke of the telecom company’s active support for the Government’s NIN enrolment programme, with 182 points of enrolment active across the country. “We are working with NIMC to increase the enrolment centres to provide an access point for as many Nigerian as possible.
Impacted by the reduction in the overall subscriber base in Q1, active data subscribers declined marginally by 71,000 to 32.5 million. “However, we recorded an 86.7% increase in data traffic and a 48.5% increase in usage (MB per user) from the existing base. The improvement in data services was supported by the completion of our acquisition and activation of an additional 800MHz spectrum, enabling us to further increase traffic by 10% and enhance throughput by 79%.”
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. As at the end of March 2021, MTN had 449,100 registered MoMo agents and 4.6 million fintech customers. Registered MoMo agents increased by 54,000.
The statement on the report noted that the company’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.
Voice revenue grew by 8.0%, supported by an 8.7% increase in traffic and 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 MTN’s base and migration to a higher quality of experience.
According to the statement,: “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%. 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. 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.”
On the company’s outlook for the rest of the year, the statement noted that MTN Nigeria’s 2021 priorities remain unchanged, with a clear focus on sustaining double-digit revenue growth, driving 4G network expansion and positioning its 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.”
The telco further promised to continue to pursue stronger and deeper stakeholder relationship and enhanced shared value across its stakeholder ecosystem while ensuring that its 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.”
While acknowledging that the rate of adoption of new SIM cards may be slow in the short term, following the commencement of SIM sales and activations, the company notes that it is optimistic that the current processes underway will entrench a more robust and sustainable registration process as it reaccelerate subscriber growth over the medium term.
“As the economy continues its steady recovery from the effects of the COVID-19 pandemic that impacted the business in 2020, we anticipate that the base effects will partly influence our commercial and financial trends in the remainder of the year. Although the availability of foreign exchange remains a constraint, we strive to minimise its impact on the business. Finally, we will continue to manage and invest in the resilience of our business and networks as we monitor the longer-term economic potential impacts of the pandemic,” it concluded.
