After three consecutive quarters of recording net losses, MTN Nigeria Communications PLC ("MTNN") returned to profitability in Q3'24, achieving a PAT of ₦4.13 billion. The performance highlighted the positive results from management's strategic efforts in managing FX threats on operating expenses. Through the renegotiation of its tower contracts (which were predominantly charged in USD), MTNN achieved a N54 billion net savings in operating expenses linked to tower costs and an uptick in EBITDA margin to 37.6% in Q3'24 from c.32.0% in Q2'24.
Over the next 12 months, given our expectation for relative currency stability and management's continued efforts to deliver on its 5-point agenda to manage FX exposure and reduce operating expenses, we are cautiously optimistic on MTNN's ability to recover from the FY'23 and projected FY'24 losses in FY'25.
Outlook into FY'25
Over the last 5 years, MTNN's topline has been primarily driven by its data segment, which accounted for 72.6ppts of the 111.0% growth recorded in the period. The segment was trailed by voice (19.6ppts), SMS (7.3ppts) and roaming (5.4ppts). We expect this contribution trend in data to be sustained in the near term, driven by the sustained uptick in data consumption per user (11.2GB as of 9M'24 vs 8.5GB last year). In addition, despite the lower growth in voice revenue in 9M'24 (viz-a-viz the data growth of 52.2%), which was primarily occasioned by the net disconnection of 2.7 million users following the completion of the NIN-SIM linkage exercise, we see latitude for 12.0% and 11.2% increases in voice revenue in FY'24E and FY'25F (vs 52.0% and 50.0% for data). The growth in voice revenue should be supported by the re-onboarding of disconnected customers and a net positive effect of porting on the client base.
