MTN Records N385.1Bn Revenue in Q1 2021 Despite Losing 5 million Subscribers

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Nigeria’s biggest telecom provider, MTN is on track to achieve its double-digit revenue growth plan this year. The telco reported that its service revenue grew by 17.2% YoY to N385.1 billion during the first quarter of 2021. This is up 5.4% from the N365.2bn of the previous quarter.

This feat was achieved due to the huge growth of data and voice revenue despite the impact of the pandemic and a decline in subscribers.

MTN Rakes in $385.3Bn Despite Losing 5 million Subscribers in Q1 2021

A breakdown shows that voice revenue, which generated 63% of the total sum, grew by 8.0% from N226.5Bn to N244.6Bn. This growth was supported by the 8.7% increase in traffic and customer value management initiatives.

MTN explained that the effect of the SIM ban on voice revenue was offset by increased usage by active SIMs in its base and migration to a higher quality of experience.

Data revenue saw even higher growth. The report shows that it maintained the positive momentum from Q4 2020, rising by 42.6% YoY to N105.6Bn.

This was fueled by increased usage, traffic, the boost in 4G penetration and increased network capacity following the acquisition and activation of an additional 800MHz spectrum in March 2021.

Insights from the report show that that data traffic increased by 86.7% with the addition of the 800MHz spectrum enhancing output by 79%.

Similarly, 4G penetration grew exponentially. “4G network now covers 61.8% of the population, up from 60.1% in December 2020. We added Like approximately 1.2 million new smartphones to the network, bringing smartphone penetration to 47.5% of our base, up from 45.9% in 2020,” MTN revealed.

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Expenses Hit N180.7 Billion

With the huge revenue MTN raked during the quarter, its profit should have been higher than the N73.7 bn reported. The dropped was caused by the double-digit growth in expenses.

The report shows that expenses rose by 14.8% to N180.7bn, mainly driven by a 19.2% increase in operating expenses arising from an accelerated site rollout and the effects of Naira depreciation on lease rental costs.

The telco however said the overall increase in expenses was partly mitigated by the comparatively moderate growth of 7.8% in the cost of sales following the suspension of new SIM sales and activations.

Similarly, Capital expenditure in the quarter was N89.9 billion, up 19.3% mainly due to site rollouts, while free cash flow increased by 18.9% to N114.7 billion

Over 5 million subscribers lost

The 4-month NCC ban on new SIM sales and registration effectively curtailed subscriber growth. During the ban, MTN lost a total of 9.2 million subscribers – representing 75% of the 12.2m subscribers it added in the entire 2020.

A break down shows that Mobile subscribers declined by 5 million to 71.5 million while Active data users declined marginally by 71,000 to 32.5 million.

MTN Rakes in $385.3Bn Despite Losing 5 million Subscribers in Q1 2021

With the ban already lifted, the telco has a great prospect for recovery in Q2. However, MTN revealed that the initial run-rate of additions may be slower than usual due to new process requirements, system limitations and reduction of qualified locations for SIM registration.

About 50% of MTN subscribers have still not linked their NIN

According to the report, over 35 million subscribers have submitted their NINs as of April 30, 2021. This is a smaller approximation compared to the 37.2m users the telco claimed had updated NINs as of February 2021.

This clearly shows that about 50% of its subscribers have still not linked NIN in the two months that have followed despite an increase in registration centres.

With the latest deadline for NIN- SIM linkage by FG just three days away, millions of subscribers are at risk of losing mobile connections. That won’t be good for business.

Digital revenue doubles

Asides from Voice and Data, MTN Digital revenue continues to rise as customers continued to adopt more digital products and services. According to the report, digital revenue grew by 101.0% from N1.8Bn to N3.7Bn. However, its active user base was largely flat at 2.8 million.

Similarly, MTN’s fintech arm saw double-digit growth. The numbers show that revenue grew by 28.5% from N11Bn to N14.2 bn. The volume of transactions processed was over 24 million in the quarter, up more than four times YoY, from an active base of 4.6 million subscribers.

MTN Rakes in $385.3Bn revenue Despite Losing 5 million Subscribers in Q1 2021
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It also shows that MoMo agents increased by 54,000 to 449,146. The boom was reported to have been driven by the increased adoption of Xtratime and other core fintech services.

“We continue to expand our MoMo agent network and broaden our service offerings to include assisted withdrawal irrespective of the bank where the account is domiciled,” MTN said.

USSD Saga continues – N40.3 billion Owed by Banks

Speaking on the USSD tussle with Banks, MTN says about N40.3 billion was due to the company as of the end of Q1. However, the telco says it will continue to offer the service and account for its revenue on a cash basis.

It revealed that a mechanism for and timing of the recovery of the industry-wide outstanding debts that exist for USSD services has been provided to banks.

And it will 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.

In Summary

MTN’s other business including enterprise continued their recovery from the impacts of the COVID-19 lockdown as economic activities picked up steam. However, service revenue for the enterprise was largely flat YoY, mainly due to the non-recognition of USSD revenue in Q1.

Going forward, MTN is poised to regain lost subscribers as SIM sales/registration has resumed. According to the company, processes are currently underway to entrench a more robust and sustainable registration process.

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