MTN Nigeria’s profit more than doubles as tariff hikes jack up revenue

A 50 per cent tariff increase in February helped boost MTN Nigeria’s first-quarter profit by 134 per cent as the company gradually eases its way out of a financial distress triggered by a 2023 devaluation of the naira.

Profit after tax stood at N133.7 billion for the three months to March, according to its latest earnings report, compared to a net loss of N392.7 billion a year earlier.

That extended its run of profitability for the third consecutive quarter since last June after an FX loss of N740 billion from a whirlwind of exchange rate volatility battered profits for most part of 2023 through last year.

Apart from triggering a record loss in 2023, the crisis caused liabilities to exceed assets, putting MTN Nigeria in a negative net asset position.

Revenue for the local operation of Johannesburg-based Africa’s largest mobile service provider MTN Group ascended 40.5 per cent to N1.1 trillion in the review period.

It found support from the implementation of upward adjustments in tariffs as endorsed by the Nigerian Communications Commission (NCC) to ease the pangs of a weaker naira on the operations of telcos.

The 50 per cent increase in tariff rates uniformly applies to voice calls, SMS and data plans for MTN Nigeria and other operators.
Telecom multinationals operating in Nigeria are particularly vulnerable to shocks from exchange rate instability on account of their foreign currency obligations, considering that a large part of their operational and capital expenditures is denominated in dollars.

The price adjustments are “a critical enabler to sustain ongoing investment in the industry and maintain the quality of service for our customers,” CEO Karl Toriola said of the tariff increase in a note.

“This has empowered us to accelerate network investments with N202.4 billion in capex (up 159%), focused on boosting capacity and improving user experience,” he added.

Mr Toriola alluded to the deal struck by the parent company with Airtel Africa to pool resources together for a passive infrastructure initiative in Nigeria, expecting the move to ramp up coverage and drive efficiency.

EBITDA margin, typically used by investors to measure a company’s profitability from operations, sometimes in comparison to its peers, rose to 46.6 per cent from 39.4.

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The company cut its realised fx loss by 66 per cent and earned N55 billion in unrealised foreign exchange gain, partly erasing the N476.8 billion reported in the same period of last year.

Pre-tax profit came to N202.6 billion in a shift away from a pre-tax loss of N575.7 billion incurred a year earlier.

MTN Nigeria, which increased its capital expenditure by N202.4 billion during the quarter, said it is looking to commit much more to network investment for the remainder of the year.