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MTN, Nigeria's largest telecom company, is on track to meet its double-digit revenue growth target this year. The telco reported a 17.2 percent YoY increase in service revenue to N385.1 billion in the first quarter of 2021. This is an increase of 5.4 percent from the previous quarter's N365.2bn.

This feat was accomplished despite the pandemic's impact and a decline in subscriber numbers.

The breakdown reveals that voice revenue, which accounted for 63% of the total, increased by 8% from N226.5Bn to N244.6Bn. The 8.7 percent increase in traffic and customer value management initiatives aided in this growth.

Revenue from data services increased even faster. The report indicates that it maintained a positive trend beginning in Q4 2020, increasing by 42.6 percent year on year to N105.6Bn.

This was fueled by increased usage and traffic, increased 4G penetration, and increased network capacity due to the March 2021 acquisition and activation of additional 800MHz spectrum.

According to the report, data traffic increased by 86.7 percent due to the addition of the 800MHz spectrum, which increased output by 79 percent.

Similarly, 4G penetration increased at an exponential rate. “At 61.8 percent of the population, the 4G network now covers 61.8 percent of the population, up from 60.1 percent in December 2020. We added approximately 1.2 million new smartphones to the network, increasing smartphone penetration to 47.5 percent of our base from 45.9 percent in 2020,” MTN disclosed.

Expenses Hit N180.7 Billion

MTN's profit should have been higher than the N73.7 billion reported during the quarter, given the company's massive revenue. The decline was attributed to double-digit increases in expenses.

According to the report, expenses increased 14.8 percent to N180.7 billion, primarily due to a 19.2 percent increase in operating expenses due to the effects of Naira depreciation.

However, the telco stated that the overall increase in expenses was partially offset by a relatively modest 7.8 percent increase in cost of sales following the suspension of new SIM sales and activations.

Over 5 million Subscribers lost

The NCC's four-month-long moratorium on new SIM sales and registration effectively slowed subscriber growth. MTN lost about 9.2 million subscribers during the ban, accounting for 75% of the 12.2 million subscribers it added in 2020.

Mobile subscribers fell by 5 million to 71.5 million, while active data users fell by 71,000 to 32.5 million.

With the ban lifted, the telco has a strong chance of recovering in Q2. However, MTN indicated that the initial run-rate of additions may be slower than usual due to new process requirements, system constraints, and a reduction in the number of qualified SIM registration locations.

About 50% of MTN subscribers have still not linked their NIN

As of April 30, 2021, the report states, over 35 million subscribers had submitted their NINs. This is a lower estimate than the 37.2 million users the telco claimed had updated their NINs as of February 2021.

This clearly demonstrates that approximately 50% of its subscribers have not yet linked their NIN in the two months since, despite an increase in registration centers.

With the FG's latest deadline for NIN-SIM linkage approaching in less than three days, millions of subscribers face losing their mobile connections. That will be detrimental to business.

Digital Revenue Doubles

Apart from voice and data services, MTN Revenue from digital products and services continues to grow as customers adopt more digital products and services. Digital revenue increased by 101.0 percent from N1.8 billion to N3.7 billion, according to the report. However, its active user base remained essentially unchanged at 2.8 million.

Similarly, MTN's fintech subsidiary grew by double digits. Revenue increased by 28.5 percent, from N11 billion to N14.2 billion. The quarter's transaction volume exceeded 24 million, a more than fourfold increase year over year, from a base of 4.6 million active subscribers.

Additionally, it indicates that the number of MoMo agents increased by 54,000 to 449,146. According to reports, the boom was fueled by increased adoption of Xtratime and other critical fintech services.

“We are continuing to grow our MoMo agent network and expanding our service offerings to include assisted withdrawal regardless of the bank that holds the account,” MTN stated.

The USSD Saga Continues – Banks Owe N40.3 Billion

Regarding the USSD dispute with banks, MTN reports that the company owed approximately N40.3 billion at the end of the first quarter. The telco, however, says it will continue to provide the service and report revenue on a cash basis.

It revealed that banks have been provided with a mechanism and timeline for recovering industry-wide outstanding debts for USSD services.

Additionally, it will continue to work with the NCC, the Central Bank of Nigeria (CBN), and deposit money banks (DMBs) to finalize the operational details for the new pricing framework for USSD services that was agreed upon.

In summary, MTN's other businesses, including enterprise, continued to recover from the COVID-19 lockdown's effects as economic activity increased. However, enterprise service revenue remained largely flat year over year, owing primarily to the non-recognition of USSD revenue in Q1.

MTN is now in a position to reclaim lost subscribers, as SIM sales and registration have resumed. According to the company, steps are being taken to establish a more robust and long-lasting registration process.