MTN Nigeria sheds 7.6m subscribers as regulator clamps down
MTN lost 7.6 million subscribers in its most lucrative market, Nigeria, in the half-year ended 30 June, due to the regulatory restrictions on new SIM sales and activations.
Africa’s biggest mobile operator says its subscriber base now stands at 68.9 million, and active data users also declined by approximately 52 000 to 32.5 million.
The Johannesburg-headquartered MTN Group has a footprint in 21 countries, and Nigeria is the most profitable market, generating the lion’s share of the telco’s revenue.
In the year ended December 2020, MTN Group service revenue increased by 11. 9% to R170.1 billion (2019: R141.8 billion). This was led by growth of 14.6% in MTN Nigeria.
In the recent past, Nigerian operations have been the anchor market for MTN’s search for new sources of revenue, recording a blowout performance with increased uptake of its fintech business, which includes Mobile Money (MoMo), insurance, airtime lending and e-commerce.
In the last financial year, MTN Nigeria’s fintech subscribers increased by more than eight times to 4.7 million, driving higher transaction volumes of over 51.5 million. The core fintech growth stood at 28%.
Nonetheless, in December, Nigerian authorities threatened mobile operators with punitive punishment, including withdrawal of operating licences, if they fail to register subscribers and submit updated SIM registration records to authorities.
All hope isn’t lost
MTN says the move had a massive impact on its subscriber numbers in the first half (H1) of the current financial year, but it remains optimistic it will turn the tide.
“Operationally, our mobile subscribers closed H1 at 68.9 million, down 9.9% from December 2020. This was due to the regulatory restrictions on new SIM sales and activations, which were lifted on 19 April 2021. Although the initial run-rate of additions has been slower than usual due to new process requirements, we anticipate growth to normalise in the short-term as more of our acquisition centres are certified for SIM registration,” says MTN Nigeria CEO Karl Toriola.
Despite the setback in subscriber numbers, in the period, MTN Nigeria’s service revenue was up by 24.1% to N790.3 billion, and earnings before interest, tax, depreciation and amortisation grew by 27.6% to N417.2 billion.
“Our board of directors has approved an interim dividend of N4.55 kobo per share to be paid out of distributable net income. This represents a growth of 30% over N3.50 kobo per share paid in H1 2020,” Toriola comments.
“In the first half of 2021, we made good progress strengthening the resilience of the business, managing the impact of the COVID-19 pandemic and enhancing support to our people, customers and other stakeholders.
“Our progress towards achieving greater business resilience is reflected in the upgrade by Global Credit Ratings (GCR) of our national scale long-term issuer rating to AAA and affirmation of our national scale short-term rating of A1+ with a stable outlook. This puts MTN Nigeria on the highest possible GCR scale for short-term and long-term ratings, providing a solid platform for growth.”
Two decades of service
Furthermore, MTN, which is celebrating 20 years in Nigerian this year, reiterated its intention to sell up to 14% of its investment in MTN Nigeria, subject to market conditions over the medium-term.
“MTN Nigeria’s shareholders approved an equity shelf programme at the last annual general meeting. This will facilitate a process to increase ownership of the company by more Nigerian retail and institutional investors. Alongside this, we further localised our predominantly Nigerian management team with the appointment of Nigerians to two key senior positions (chief marketing officer and chief information officer) previously held by expatriates,” Toriola explains.
Additionally, MTN Nigeria says it continues to invest in its network, accelerating the expansion of its 4G coverage and providing home broadband.
As part of the telco’s rural connectivity programme, MTN plans to connect approximately 1 000 rural communities to its network this year, with an additional 2 000 in 2022.
“We are delighted that these are translating into strong operational performance in line with the objectives of Ambition 2025. In the next three years, we will invest over N600 billion to expand broadband access across the country in support of government’s broadband plan.”