MTN Nigeria Plc released its 2023 second-quarter results showing pre-tax profits fell a whopping 64% to N44.6 billion. This took its half-year profits to N200.3 billion compared to N268.6 billion same period in 2022.
Like most companies in Nigeria, MTN also suffered a foreign exchange loss of N131.4 billion which dragged profits down.
Key highlights Q2 results
Revenue N590.6 billion +23.3% YoY
Gross Profit N393.5 billion +22.9% YoY
Operating Profits N214.9 billion +24.3% YoY
Pre-tax profits N44.6 billion -64.3% YoY
Forex losses of N131.4 billion
Finance cost N182 billion +259% YoY
Total debts N855 billion vs N689.6 billion (December 2022)
Net Assets N258.2 billion vs N355.6 billion (December 2022)
Working capital -N588.7 billion
Gross margins 2023 Q2 66.64% vs 66.84% YoY
Operating profit margin 2023 Q2 36.4% vs 36.1% YoY
Earnings per share 2023 Q2 N1.35 vs N4.17 YoY
Proposed dividends N5.6/share
Other key details Half-year
EBITDA Half year N614.5 billion +20.6% YoY grew by 20.6%
to N614.5 billion
EBITDA margin (half year) declined by 0.6 percentage points (pp) to 53.0%
Mobile subscribers 77.1 million +4% YoY
Data users 41 million +11.5%
Active mobile money (MoMo PSB) wallets 3.1 million, +1.1 million YoY
Total data traffic +45.6%,4G traffic constituted 82.5% (up by 5.2pp) and 5G constituted 21% on all 5G-colocated clusters.
Company commentary – MTN reported that the Central Bank of Nigeria’s recent forex operations changes caused a significant 60% movement in the exchange rate to N756.24/US$ by the end of June 2023.
Although the immediate impact resulted in unrealized forex losses for H1, the company believes that the liberalization of the forex regime and removal of the fuel subsidy will attract international capital, drive foreign direct investment, and have a net positive effect on their longer-term outlook.
The EBITDA margin was not materially impacted in H1 due to the nature of their tower contracts, but the full exchange rate impact is expected to be felt in H2.
A 10% exchange rate movement could directly reduce the EBITDA margin by approximately 1.3 percentage points. The impact on finance costs in H2 will depend on further exchange rate variations during that period.
Although these losses are yet to be realized, accounting regulations necessitate their recognition due to the potential likelihood of them materializing. Despite this challenge, MTN’s report highlighted robust operating profit margins, indicating the strength of its business model.
