MTN Nigeria, similar to its rival Airtel Africa, has faced a decline in profits for the first half of 2023.
This development was made known in an official financial statement released on the Nigerian Exchange Group which revealed a 29.14% drop in profit, amounting to ₦128 billion for the period of January 1 to June 30, 2023, compared to ₦181 billion during the same period in 2022.
The company’s CEO stated that the drop in profit was due to challenging conditions, inflation, and naira devaluation. However, the telco’s revenue showed growth, increasing by 21.96% to ₦1.15 trillion in H1 2023, compared to ₦950 billion in H1 2022.
MTN Nigeria’s CEO, Karl Toriola, attributed the challenging operating conditions in H1 2023 to factors such as high energy, food, and general inflation, adverse global macroeconomic and geopolitical environment, cash shortages in Q1, forex volatility, and supply chain uncertainties.
Toriola acknowledged the benefits of the implementation of policy reforms by President Bola Ahmed Tinubu to remove fuel subsidies and liberalize foreign exchange management have in the long term, but expressed the negative short-term effects by stating that it has added financial burdens on consumers and businesses, impacting MTN Nigeria’s margins in H2.
Despite the challenges, MTN Nigeria performed well in H1, gaining 1.5 million new subscribers, bringing its total to over 77 million subscribers. The company focused on enhancing the capacity and coverage of its 4G and 5G networks, with 4G traffic constituting 82.5% of total data traffic and 5G constituting 21% of all 5G-colocated clusters. However, higher energy prices and rising costs affected the company’s margins.
The financial statement also reported a 21.6% growth in service revenue, driven by voice revenue growth of 12.1% and data revenue growth of 34.9%. Additionally, active mobile money (MoMo PSB) wallets increased by 1.1 million to 3.1 million, and the total number of registered MoMo PSB wallets reached over 22 million, with 227,000 MoMo agents and 38,000 merchants in the ecosystem.
Looking ahead, MTN Nigeria’s priorities include its network, MoMo PSB, and the expansion of 4G, 5G, and rural coverage. The full-year outlook for 2023 will be influenced by factors such as exchange rates and the new VAT on tower leases effective from September 2023, which remain key near-term risks to their medium-term guidance.