Last Update07 Aug 25
MTN Nigeria – Operational Turnaround with Data-Led Recovery and Margin Expansion
Balance Sheet Revival: From Deep Negative Equity to Near Break-Even
MTN Nigeria’s performance in Q2 2025 marks a remarkable financial turnaround, with negative equity shrinking from N458 billion in FY 2024 to just N42.51 billion as of mid-2025. This improvement suggests that MTN is on the cusp of restoring shareholder value and resuming dividend payouts — a welcome shift for investors following the 2023 dividend suspension.
The sharp rebound has been driven by robust data revenue growth, operational efficiency, and strategic cost-saving initiatives, collectively transforming MTN’s balance sheet health and investor confidence.
Data Revenue Surge: The Growth Engine
A standout in MTN’s Q2 performance was data revenue, which rose by a staggering 85.6% year-on-year, reaching N701 billion compared to N377 billion in Q2 2024. This surge reflects increasing data penetration, higher smartphone usage, and rising demand for digital services in Nigeria.
Data’s expanding share of total revenue underscores a successful pivot toward more profitable and scalable service lines, positioning MTN as a key enabler of Nigeria’s digital economy.
Margin Expansion: A Sign of Operational Efficiency
MTN’s EBITDA margin improved significantly to 53.7% in Q2 2025, pushing its H1 margin to 50.5%, well above the initial full-year forecast of 44.5%. This margin expansion was largely driven by:
- A more stable exchange rate, reducing forex-related volatility.
- Renegotiated tower lease agreements, yielding substantial cost savings.
Analysts have now revised the full-year EBITDA margin forecast to 51.7%, with a five-year average projection of 53.7%, affirming a structurally more efficient business model.
Aggressive Capital Deployment: Laying the Groundwork for Future Growth
MTN’s capital investment is another cornerstone of its recovery strategy. CAPEX rose by 288.4% YoY in H1 2025 to N565.67 billion, reflecting early-year frontloading of infrastructure expansion. This elevated CAPEX intensity of 23.8% is expected to moderate to around 17.5% in H2, keeping within a strategic range of 16%–19%.
Looking ahead, MTN plans to invest N1.34 trillion annually over the next five years, underpinning its long-term revenue growth projection of 26.8% per annum. These investments aim to scale MTN’s network, improve quality of service, and consolidate its leadership in Nigeria’s telecom space.
Strengths
- Strong Data Revenue Growth: +85.6% YoY highlights the shift toward high-margin, future-proof services.
- EBITDA Margin Expansion: Operational efficiency from FX stability and renegotiated leases is driving sustainable margin gains.
- Improving Balance Sheet: Significant reduction in negative equity creates scope for dividend reinstatement and financial flexibility.
- Robust CAPEX Plan: N1.34 trillion annual CAPEX signals a long-term vision for network leadership and revenue growth.
Weaknesses & Risks
- Capital Intensity: Aggressive investment requires consistent top-line growth to justify returns.
- Residual Negative Equity: Despite major progress, MTN’s equity is still negative, posing financial and regulatory risks.
- Execution Risk: Delivering on the scale of infrastructure investment requires consistent operational execution.
Conclusion: A Rebounding Giant with Cautious Upside
MTN Nigeria’s Q2 2025 results signal a strong operational and financial comeback, fueled by data monetization and margin discipline. The balance sheet repair, paired with bold infrastructure investment, sets the stage for sustained growth and potential shareholder rewards.
While current valuation reflects much of the optimism, the stock remains attractive for investors seeking exposure to Nigeria’s digital transformation and a high-quality telecom franchise with improving fundamentals.
MTN Nigeria has delivered a remarkable turnaround in H1 2025, with a profit after tax of ₦414.86 billion, compared to a loss of ₦519.06 billion in H1 2024. This rebound is primarily driven by strong revenue growth, operational efficiency, and the absence of last year’s severe foreign exchange losses. Despite elevated finance costs and ongoing FX-related risks, MTN Nigeria's solid fundamentals, resilient topline performance, and recovery in earnings per share (EPS) signal a renewed growth trajectory.
Key Strengths:
- Strong Revenue Growth:
- Group revenue surged by 54% year-on-year to ₦2.38 trillion (H1 2025 vs. ₦1.54 trillion in H1 2024), driven by data and digital services expansion.
- Massive Profit Recovery:
- H1 2025 profit of ₦414.86 billion compares impressively to a loss of ₦519.06 billion in the same period last year — a swing of nearly ₦934 billion.
- Stable Operating Margin:
- Operating profit grew nearly 193% to ₦892.82 billion (from ₦304.55 billion in H1 2024), showing strong cost control at the operational level.
- Reduced FX Volatility Impact:
- Net foreign exchange loss was significantly lower at ₦5.23 billion vs. ₦887.68 billion in H1 2024, indicating improved currency management and a more stable naira environment.
- EPS Rebound:
- Basic EPS improved from a loss of ₦24.71 to a positive ₦19.78, underlining restored shareholder value and potential for dividend resumption or growth.
Key Weaknesses:
- Rising Finance Costs:
- Finance costs rose significantly by 53% to ₦279.75 billion (from ₦183.09 billion in H1 2024), reflecting higher interest rates or increased borrowing.
- High Operating Costs in Key Areas:
- Major expense categories like depreciation of right-of-use assets (₦126.65 billion, +81%) and network operating costs (₦685.31 billion, +17%) indicate pressure on EBITDA margins.
- Tax Burden Resumption:
- The group paid ₦207.41 billion in taxes in H1 2025, compared to a tax credit of ₦232.23 billion in H1 2024, due to returning to profitability — a natural impact, but one that affects net margin.
MTN Nigeria is firmly on a recovery path, supported by strong revenue growth, profitability resurgence, and easing FX pressures. Although cost pressures and finance expenses remain elevated, the business has proven its ability to manage these effectively. The significant turnaround in EPS and consistent topline momentum justify a Buy rating for long-term growth-focused investors.
This equity offers compelling upside, especially if naira volatility continues to moderate and the company sustains growth in data revenue and fintech verticals.
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Disclaimer
The user WaneInvestmentHouse holds no position in NGSE:MTNN. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
