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MTN Nigeria Plc (MTNN) reported a 78.6% decline in its third quarter (Q3) 2023 profit after tax (PAT) to N18.60 billion despite an overall robust operating performance.
This earnings weakness reflected the addition of unrealised forex loss on outstanding matured trade obligations as of 30 September 2023 to the tune of N87.5 billion after the company remeasured all its trade lines to correctly exclude the naira-denominated cash cover that was provided to the banks.
For the Q3’23 operating performance, the company reported a 20.9% YoY growth in its topline following continued traction in the voice and data segments.
The voice segment recorded a 7.7% YoY sales improvement as a result of increased usage of its voice propositions as well as an expanded customer base (+4.8% YoY to 77.6 million).
Data revenue also grew by 38.9% YoY in Q3’23 following improvements in network coverage. According to the company’s disclosures, the 4G and 5G networks now cover 80.5% and 7.5% of the population (vs 79.1% and 0.0%, respectively, in December 2022).
The company, however, witnessed some cost pressures in the form of a 47.5% surge in operating expenses. This operating expense increase came about as a result of the impact of the forex harmonisation and rising inflation on the company’s tower contracts.
Consequently, EBITDA margins declined by 5.8ppts to 47.8%, while EBITDA was up by 8.2% to N293.48 billion.
9M’23 EPS came in at N7.06 (-45.23% YoY) due to the FX loss-induced finance cost pressures witnessed YtD. This earnings decline could portend a lower FY’23 dividend compared to last year’s dividend of N15.6/share.
The company’s cash balance declined by N158.50 billion to N224.86 billion on the increases in intangible assets and restricted cash, as well as higher net repayment of borrowings.
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