MTN Nigeria facing Covid-19 challenge, and oil price volatility

MTN Nigeria announced its financial results for the quarter ended March 2020, showing strong subscriber growth, however amid growing challenges including the onset of the Covid-19 pandemic, oil price volatility and foreign exchange rates.

Chief executive officer, Ferdi Moolman, said: “We recorded a solid performance in the first quarter, building on the growth momentum we achieved in Q4 2019. Service revenue was strong and rose by 16.7% driven by voice and data revenue. 4.2 million subscribers were added to the network driving voice revenue growth of 7.4%.”

He said that the group continued to deepen data penetration with the further rollout of 4G sites, increasing 4G population coverage to 48% in Q1 2020 from 44% as at year-end 2019.

This performance was achieved against the backdrop of several developments during the quarter, Moolman said.

“Value added tax (VAT) was increased in February 2020 from 5% to 7.5%, which adversely affected both revenue and costs.

“The situation has been exacerbated by upheavals in the global oil market, which put significant downward pressure on oil prices leading to an exchange rate adjustment by the Central Bank of Nigeria on 20 March, 2020, increasing some of our costs.

“In addition, a series of lockdown measures began being implemented globally in response to the Covid-19 pandemic, resulting in significant operational challenges and supply chain disruptions.”

Salient features:

  • Mobile subscribers increased by 4.2 million to 68.5 million
  • Active data users increased by 1.7 million to 26.8 million
  • Service revenue increased by 16.7% to NGN328.5 billion
  • EBITDA grew by 15.3% to N173.5 billion
  • Profit before tax increased by 8.9% to N76.3 billion
  • Earnings per share increased by 5.6% to N2.5kobo
  • Fintech revenue growth was 36.1% (+10.8% QoQ) in Q1 2020

Moolman noted that towards the end of March, the group started to experience a change in traffic patterns with a drop in voice traffic which was partially offset by an increase in data traffic on the network.

Data traffic increased as customers began to adopt digital channels for most of their activities and routines including telecommuting, entertainment and social media engagements due to the lockdown.

“To accommodate this, we have deployed additional resources to upgrade the capacity of the network. Enhancing operating efficiency remains critical at this time, with an increased focus on optimising costs and cash flow generation,” he said.

Looking ahead, the chief executive said that the remainder of the year will be shaped by the impact from Covid-19, oil price volatility and foreign exchange rates.

“Voice revenue has experienced an immediate impact from the current macro disruptions, based on early trends, especially in the mass market segment. There has been a decline in voice traffic post-Covid lockdown largely due to a slowdown in economic activity and a reduction in people’s earning capacity.

“Although we have witnessed growth in data revenue, it does not fully offset the decline in voice revenue.

“This may persist with the extension of the lockdown, and continued macroeconomic and other challenges. The company continues to monitor and analyse these developments, and their potential impact on our business,” Moolman said.


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MTN Nigeria facing Covid-19 challenge, and oil price volatility