Here’s what to know as MTNN reports N400.4bn FY’24 loss

MTN Nigeria Communications Plc (MTN Nigeria) has announced its audited results for the year ended December 31, 2024.

The results salient points…

The company’s total subscribers increased by 1.6 percent to 80.9 million. Its active data users increased by 7 percent to 47.7 million.

Service revenue increased by 35.9 percent to N3.3 trillion. Earnings before interest, tax, depreciation and amortization (EBITDA) increased by 9.2 percent to N1.3 trillion.

EBITDA margin decreased by 9.6 percentage points (pp) to 39.1percent. Loss after tax (LAT) was N400.4 billion (Profit after tax of N114.5 billion in Q4 2024).

Profit after tax (PAT) adjusted for the net forex loss decreased by 35.2 percent to N247.3 billion.

“Forex losses arising from the revaluation of foreign currency-denominated obligations resulted in a loss after tax of N400.4 billion (2023: N137 billion loss), albeit with a positive result in Q4 (PAT of N114.5 billion).

“Consequently, we reported negative retained earnings of N607.5 billion (December 2023: negative N208 billion), which was an improvement from the June 2024 balance of N727.2 billion. Shareholders’ equity was negative N458 billion (December 2023: negative N40.8 billion), compared to negative N577.7 billion in June 2024. We delivered a positive free cash flow of N388.2 billion, down 3.7percent,” MTNN said.

Capital expenditure (capex), excluding leases, decreased by 1.3 percent to N443.5 billion. MTNN recorded positive free cash flow of N388.2 billion in the review financial year. In light of the negative retained earnings, the board did not recommend a dividend for FY 2024.

CEO speaks …

Karl Toriola, CEO, MTN Nigeria said, “We are encouraged by the resilience of our business in FY 2024, which reflects our strong commitment to driving growth and managing costs.

“Despite facing significant macroeconomic headwinds, including record-high inflation, as well as ongoing currency and energy price volatility, we remained focused on executing our strategy and creating long-term value for our stakeholders”.

“We are grateful to the authorities for the recent approval of tariff adjustments, which are essential for our industry’s sustainability and crucial for addressing our negative capital position”.

“Inflation reached 34.8percent in December 2024, averaging 33.2percent for the year, significantly impacting operational costs and consumer purchasing power.

“The Monetary Policy Rate (MPR) was raised on multiple occasions throughout the year, reaching 27.5percent, aimed at counteracting naira volatility and elevated inflation. This increased our cost of borrowing,” he said.

“In the foreign exchange market, the naira depreciated to N1,535/US$ by the end of 2024 (from N907.1/US$ on 31 December 2023), as businesses and consumers continued to grapple with escalating costs.

“However, we took some comfort from the improvement in US dollar liquidity in the forex market and reduced volatility over the course of the year, as the naira exchange rate held relatively stable through H2,” Toriola said.

Headwinds significantly impacted MTN Nigeria’s costs

MTNN said these headwinds significantly impacted MTN Nigeria’s costs, particularly those related to tower leases and other foreign currency obligations.

“Notwithstanding, through our focus on commercial execution and operational efficiencies, MTN Nigeria delivered a robust topline performance and an encouraging H2 improvement in the bottom line.

Sustained commercial momentum moderated the impacts of macro headwinds.

“We made significant progress in driving the growth of our commercial operations, boosted by our ongoing investments in the coverage and capacity of our network to accommodate traffic growth and enhance the quality of service. This was a major focus of our N443.5 billion capex (ex-leases) in the year.

Read also: MTN’s 2024 financial report in numbers

Subscriber base climbs further to 80.9 million

“Our subscriber base climbed further to 80.9 million, up 1.6percent, despite the effects of the Nigerian Communications Commission’s (NCC) industry-wide directive on NIN-SIM registration. Likewise, active data subscribers grew by 7percent to 47.7 million. Our diligent gross connection and churn management initiatives, including ongoing innovation in our customer value propositions, supported the growth of our subscriber base”.

MTN N also noted that “these interventions underpinned the significant growth in the traffic on our network, reflecting the structural demand for our digital and connectivity services. Data traffic rose by 42.9percent, with average monthly data usage per user growing by 33.6percent to 11.2GB”.

“In fintech, we recalibrated the business’ growth strategy to improve the quality and stickiness of our wallet base and the development of advanced services, supported by the promotion of MoMo PSB app.

“In this regard, we revamped our customer acquisition strategy. Although this intervention resulted in a decline in active wallets (down 46.6 percent to 2.8 million), it was essential to establish a sustainable growth trajectory for our MoMo PSB ecosystem.

Uncertainty around outstanding USSD debt recovery has been resolved

“Supported by strong commercial momentum, service revenue was up by 35.9percent, led by data, voice, fintech and digital services, as well as the once-off revenue recognition relating to outstanding USSD debt owed by deposit money banks.

“Thanks to our regulators’ intervention, the uncertainty around the outstanding USSD debt recovery has been resolved, enabling us to recognise approximately N74 billion in revenue.

“As at December 2024, approximately 34percent had been repaid, and the remaining balance was recognised as receivables, which are expected to be settled in 2025. Excluding the USSD revenue recognition, underlying service revenue growth remained robust (up 32.8percent), and tracked at the upper end of our FY 2024 guidance of ‘high-20percent to low 30percent’.

“To mitigate the effects of macro headwinds on our business, exacerbated by the introduction of VAT on leases in September 2023, we drove our expense efficiency programme to deliver EBITDA growth of 9.2percent.

“While the EBITDA margin decreased by 9.6pp to 39.1percent, reflecting the above-mentioned forex impact, we are pleased with the strong growth in our Q4 EBITDA (up 53.9percent) and 3.5 percentage points (pp) year-on-year (YoY) improvement in margin to 45.8percent,” MTNN said.

Outlook

“As we continue to navigate the challenges in our operating environment, including elevated inflation and unpredictability of foreign exchange markets, we will continue our work to drive sustainable growth and operational resilience. Our primary focus is to restore a positive net asset position in the current financial year.

“The recent approvals of new tariffs by the regulator will enable us to sustain the required investments in our networks, which are needed to enhance customer experience and safeguard the sustainability of our business and industry.

“In light of the developments in our operating context, we expect FY 2025 service revenue growth of ‘at least mid-40percent’ as tariff adjustments take effect. We also anticipate an EBITDA margin of ‘at least mid-40percent’ and capex intensity in the ‘upper teens’, in line with our disciplined approach to capital allocation,” MTNN stated.

“Additionally, we have reinstated a revised medium-term guidance framework for our business. We expect service revenue growth of ‘at least 20percent’ and a recovery in our EBITDA margin to ‘at least 50percent over the medium term. We also anticipate capex intensity subsiding as it normalises over the medium term, following the expected acceleration in our capex deployment in 2025 to enhance network capacity, digital inclusion and customer experience. In terms of our balance sheet, we aim for a recovery in our retained income and shareholders’ equity positions to positive balances within the next 12 months.

However, the near-term uncertainties in our macro environment, including exchange rate and potential price elasticity from the new tariff implementation, may impact the trajectory of our recovery. We will monitor developments and update our stakeholders as appropriate while we continue to drive our growth ambitions.”