MTN Nigeria Communications (MTNN) Q4 2023 earnings summary

Executive summary

• Service revenue rose 22.4% YoY to N2.455tn, supported by customer growth and data demand; reported PAT was a N137.0bn loss, mainly due to a N740.4bn net forex loss.

• Excluding the net forex loss, PAT was N344.5bn, down 14.3% YoY; free cash flow grew 11.6% to N631.6bn.

• Subscribers increased 5.3% to 79.7m, active data users 12.7% to 44.6m, and active MoMo PSB wallets to 5.3m.

Financial highlights

• Total revenue increased 22.7% YoY to N2.469tn; Q4 revenue rose 25.1% to N695.9bn and service revenue rose 25.0%.

• EBITDA grew 12.3% to N1.203tn, while margin fell 4.5pp to 48.7%; adjusted for naira devaluation and the FIRS VAT provision, FY margin was 53.5%.

• Reported PAT was a N137.0bn loss versus restated PAT of N348.7bn in 2022; adjusted PAT excluding net forex loss was N344.5bn, down 14.3%.

• Opex increased 52.4%; excluding devaluation, inflation and energy effects, VAT on leases, and the N30.2bn FIRS provision, opex rose 13.1%.

Outlook and guidance

• 2024 expected to be challenging amid inflation and naira devaluation; medium-term EBITDA margin guidance was suspended, while medium-term service revenue guidance was maintained.

• Priorities include accelerating service revenue, restoring earnings growth, strengthening the balance sheet, and sustaining free cash flow through investment and efficiency measures.

• Constructive discussions with IHS on tower lease changes could help mitigate macroeconomic and currency risks; outcome remains conditional on successful negotiations.

• Management engaged with authorities on telecom tariff adjustments, citing inflation, energy costs, and exchange rates as pressures on industry sustainability and network investment.