MTN H1/Q2 Result – Strong Recovery with Margin Expansion Amid Cost Headwinds

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.