Data Remains the Growth Engine: MTN Nigeria Plc’s (‘the Group’) trajectory of strong revenue and profit growth sustained in Q1 2022. Revenue grew by 22% YoY to N470.98bn, driven by its primary growth engine–data. Data subscribers grew by 10% YoY to 35.90mn users in Q1 2022. Improved data conversion from new and existing subscriber base drove data revenue growth. In addition, continued acceleration of the 4G network, which led to increased data traffic, supported growth. As of Q1 2022, the Company’s 4G network achieved a 72% population coverage. As a result, data traffic increased by 85% in Q1 2022.

We believe that the growth of the local digital economy and tech-related industries including e-commerce, Fintech, creator economy (social media influencing and marketing), and the generational shift in the mode of work (i.e., hybrid work structure) supported the demand for data. All these factors translated to a 55% YoY growth in data revenue, and this accounted for 67% of the Group’s total revenue growth recorded in Q1 2022.

Mobile Subscriber Base Shrinks, But the Worst is Over: on a year-on-year basis, the Group’s mobile subscriber base declined by 2% to 70.20mn, on the back of regulatory directives on SIM registration and NIN enrollment. On April 4, 2022, the Nigerian Communications Commission (NCC) announced its decision not to extend the deadline for NIN-SIM linkage. Hence, unregistered subscribers were restricted from making outgoing calls. According to the management, over 60mn of the Group’s subscribers (85% of subscriber base) have submitted their NINs.

Fintech About to Take Flight: Revenue from fintech grew by 46% YoY to N20.89bn in Q1 2022. The Group closed Q1 2022 with 10.70mn active users and 166k active MoMo agents. The Group recently got final approval of its Payment Service Banking (PSB) License. We expect the payments business to contribute 10% to the Group’s total revenue by 2026 from the current 4% contribution.

EBITDA Margin Expansion Underpins Large Operating Scale: EBITDA margin expanded by 200 basis points to 55% in Q1 2022 (Q1 2021: 53%), resulting from operating efficiency despite foreign exchange pressures. As a result of the margin expansion, EBTIDA grew by 26% YoY to N257.15bn in Q1 2022.

MTN is the Company to Beat: Profit before tax grew by 39% YoY to N143.59bn in Q1 2022, which effectively implies a 30% margin. Owing to a 500 basis points increase in effective tax rate to 33% in Q1 2022 (Q1 2021: 28%), profit after tax recorded a moderated growth of 31% YoY to N96.82bn.


We made an upward revision to our earnings per share (EPS) projection for FY 2022 to N18.75 (previous: N17.31). In our previous report on MTNN, we highlighted increased market share, sustained data demand, payment service banking, and development of 5G broadband as the near-to-medium term growth drivers. The Group’s Q1 2022 financial performance partly reflected our views. We expect the trend to sustain into the subsequent quarters of the year.

We now estimate a N296.77 fair value for the stock (previous: N251.48). At our fair value, the implied justified price-to-earnings ratio is 15.82x. Based on the stock’s current market price, we believe that the stock offers a potential 19% total return (including dividend). Hence, we recommend a BUY.

Please click the link “MTN Nigeria Plc Q1 2022 – Growth Momentum Still Rock Solid Despite Regulatory Pressures” to view the whole report on MTN Nigeria Plc.

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