MTN Nigeria Wins the Earnings and Data Wars as Airtel Loses Ground

Telecom giants MTN Nigeria Plc (MTNN) and Airtel Africa Plc are often in competition to capture Nigeria’s household spending.

Both companies have so many things in common such as excellent corporate governance, a healthy balance sheet, and a stable working capital, innovative products, investment in 4 and 5 G services and a proactive management team that makes it possible for them to be among the top 10 companies in Nigeria.

Despite the fact that these firms are taking advantage of a young population that crave for mobile data as underpinned by the proliferation of mobile phones, MTN Nigeria seems to have a massive edge over its competitor right now.

The difference between MTN Nigeria’s results and the others is that it posted solid growth on the top and bottom lines, which earned it Buy ratings from many investment houses, and indicated strength in the back half.

The biggest takeaway from the report is that MTNN is gaining share over Airtel Africa, which is bad news for Airtel’s shareholders.

According to data gathered by MoneyCentral, in the second quarter of 2023 financial statements obtained from the NGX, MTN Nigeria’s net income of N128.28 billion, compares to a loss after tax of N114.60 billion for Airtel Africa as the company succumbed to foreign exchange losses that its competitor surmounted.

MTNN has 291 million customers, and that compares with Airtel Africa’s 143.1 million.

Of course, MTNN’s Voice revenue increased by 13.19 percent, and that compares to Airtel’s 1.80 percent; MTNN’s Data revenue was up 34.74 percent, while Airtel’s rose by 16.29 percent.

Interestingly, MTNN makes more profit from its core activities as operating income grew by 19.65 percent, and that compares to Airtel Africa’s 8.70 percent.

The Telecommunications and Information Services sector remains a bright spot and major driver of economic activities as it has in the first contributed N2.508 Trillion to the nation’s gross domestic product, GDP, representing 14.13 percent, in the first quarter of 2023.

Figures released by the National Bureau of Statistics, NBS, showed that the sector recorded a 4.3 percent increase from its performance in the last quarter of 2022 when it recorded 13.55 percent.

When compared on a year-on-year basis, the growth showed a positive progression from 12.94 percent in the first quarter of 2022, to the 2023 figure of 14.13, which is an approximate growth of 9.19 percent.

Investors bullish MTN Nigeria, punish Airtel Africa

Most investment houses have given MTNN a pat on the back for overcoming a challenging operating environment.

Analysts at Chapel Hill have retained their BUY rating on MTNN, but their target price of N332.76 is under review. MTNN is currently trading at 3.7x FY-23E EV/EBITDA, cheaper than its Emerging Markets peers average of 6.4x.

Little wonder the shares of MTNN have gained so far this year more than its peer rival as it has a year-to-date (YTD) return of 27.91 percent, while Airtel Africa has a negative YTD return of -27.91 percent.

Despite the foreign exchange losses brought on by currency devaluation, MTN Nigeria rewarded shareholders for putting their hard earned cash in the business. It will pay an interim dividend of N5.60 per 2 kobo ordinary shares to shareholders.