MTN Nigeria Becomes First NGX Company to Report Over N1trn in EBITDA

MTN Nigeria (MTNN) Plc is the first NGX listed company to record over N1 trillion earnings before interest, taxation, depreciation and amortisation (EBITDA), as  future earnings will be driven by Data and Fintech.

The largest telecommunication firm in Africa’s most populous nation generates much stronger EBITDA and EBITDA margin than peer rivals such as Airtel Africa, and Safaricom, who are its peer rivals in Africa.

MTNN recorded the highest EBITDA margin among all the non-bank companies in the NGX30 Index in 2022, according to a recent report by Chapel Hill Denham Limited.

EBITDA is a widely used measure of core corporate profitability; it lets investors assess corporate profitability net of expenses dependent on financing decisions, tax strategy, and discretionary depreciation schedules.

The EBITDA margin is a performance metric that measures a company’s profitability from operations. Also, it is an earnings measure that focuses on the essentials of a business: its operating profitability and cash flows.

Having generated consistent earnings growth even amid the coronavirus pandemic and challenging operating environment, MTNN trades at a much more attractive valuation than peer rivals.

Analysts are of the view that the telco giant is a stock to “buy” as its strong cash flow positions, high dividend yield and healthy balance sheet makes it impervious to macroeconomic shocks.

It has a 2023e of EV/EBITDA of 5.4x, which is still conservative and cheaper, compared to 6.3x, 7.2x and 7.7x for Airtel Africa, Safaricom, and Vodacom respectively, based on revised target price TP by Chapel Hill Denham

Breaking records upon records, MTNN is the first Nigerian company listed on the Exchange to cross the N2 trillion revenue mark, with its full year (FY-22) revenue reported at N2.01 trillion.

“It is, however, interesting that with growth of 6.8% yoy, voice revenue crossed the N1tn mark for the first time since inception of MTNN’s business. This is another “first” as no telecom company in Nigeria has such a feat,” said analysts at Chapel Hill Denham.

“Notably, voice subscribers increased by 10.5% yoy or 7.2mn net new addition of subscribers to 75.6mn in FY-22, partly underpinned by 4.4mn reactivation of SIM cards,” said analysts at Chapel Hill.

There are positive prognosis about the company’s profit that will be getting bolstered by an increase in tariff in 2023 even amid inflationary pressures and currency devaluation.

It is worth noting that the company’s low leverage (low debt) paves the way for it to declare higher dividend, another potential of a super impressive firm that is taking advantage of the country’s rising young population who crave data usage.