MTN Group shares rose more than 4% in Johannesburg on Wednesday after its biggest unit, MTN Nigeria Communications, posted a solid financial report for the first quarter ended 31 March 2020.
Year-on-year service revenue increased by 16.7% to N328.5-billion, while earnings before interest, tax, depreciation and amortisation rose by 15.3% to N173.5-billion — representing a slight moderation in the Ebitda margin to 52.7%.
Mobile subscribers rose by 4.2 million to 68.5 million.
“We recorded a solid performance in the first quarter, building on the growth momentum we achieved in the fourth quarter of 2019,” MTN Nigeria CEO Ferdi Moolman said in a statement.
“Data revenue increased by 59.2%, supported by growth in data traffic with a further 1.7 million active subscribers connecting to the Internet during the quarter. We continued to deepen data penetration with the further roll-out of 4G sites, increasing 4G population coverage to 48% in the first quarter from 44% at the end of 2019.”
Digital revenue grew by 63.7%, while fintech was up by 36.1%. The operator’s mobile money agent network grew to 178 000, adding 70 000 agents during the quarter.
Nigerian VAT was hiked in February from 5% to 7.5%, which adversely affected both revenue and costs, MTN said. “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, increasing some of our costs.”
Global lockdown measures in response to the Covid-19 pandemic have also resulted in “significant operational challenges and supply chain disruptions”.
“Our team has worked extremely hard to minimise the impact of the temporary disruption in the supply chain on operational continuity. We have put in place the necessary measures and resources to keep the network running, and continue network roll-out and expansion of population coverage.
Toward the end of March, MTN Nigeria said it started experiencing 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.”
It said the impact of Covid-19 on its first-quarter performance was not significant, except for delayed orders. “However, given that lockdown measures only started toward the end of the quarter, and given the uncertainty associated with the likely duration and related economic impact of the Covid-19 pandemic and its effects on our customers, unstable oil prices as well as pressure on the rate and availability of foreign exchange, it is currently too early to reliably quantify the direct or indirect financial effects on our business going forward.”