MTN Nigeria: Subscriber Growth and Strategic CAPEX Drive a Strong H1 Recovery
Investment Thesis
MTN Nigeria delivered an impressive turnaround in H1 2025, reporting robust subscriber growth, significant service revenue expansion (+54.6%), and a swing to profitability after last year’s losses. This performance reflects the resilience of its commercial strategy amid regulatory headwinds, aggressive capital investment, and strong execution across voice, data, and fintech services. With continued network expansion, pricing optimisation, and fintech monetisation, MTN Nigeria is positioned for sustained earnings growth. However, regulatory risk, heavy CAPEX, and macroeconomic volatility remain key considerations.
Key Strengths
1. Solid Subscriber Growth Despite Regulatory Challenges
- Subscriber base: 84.7 million (+6.7% in H1 2025), with 3.8 million net additions despite SIM registration restrictions.
- Strategic onboarding of new agents helped maintain momentum under tighter compliance rules.
2. Strong Data and Digital Growth
- Active data users: 51 million (+11.8% YoY), supported by network capacity upgrades.
- Data traffic: +41.2% YoY, reflecting deeper digital engagement and lifestyle shifts.
3. Aggressive CAPEX to Strengthen Market Leadership
- CAPEX (excluding leases): ₦565.7 billion (+288.4%), the largest in MTN Nigeria’s history.
- Funded infrastructure expansion, including the Dabengwa Tier 3 Data Centre—West Africa’s largest and most advanced facility.
- Positions MTN as the backbone of West Africa’s digital economy.
4. Outstanding Financial Performance
- Service revenue: ₦2.4 trillion (+54.6% YoY).
- EBITDA: ₦1.2 trillion (+119.5%), with margins benefiting from operational efficiency and pricing strategies.
- PAT: ₦414.9 billion, a swing of nearly ₦934 billion from last year’s losses.
- Free cash flow: ₦409.8 billion (+18%), reinforcing liquidity and investor confidence.
5. Growing Fintech Ecosystem
- 2.7 million active wallets, fivefold increase in deposits.
- Expanding beyond connectivity into financial inclusion and digital payments, a high-margin growth segment.
6. Strategic Initiatives to Deepen Digital Inclusion
- National roaming deal with 9Mobile and onboarding of MVNOs.
- ₦3 billion pledge to Nigeria’s 3 Million Technical Talent Programme and ₦100 million accelerator fund for local startups, strengthening MTN’s ESG and innovation credentials.
Key Weaknesses & Risks
1. Elevated CAPEX and Balance Sheet Pressure
- While strategic, the 288.4% CAPEX surge could weigh on short-term free cash flow and leverage metrics, requiring disciplined capital management.
2. Regulatory Risks
- SIM registration and broader compliance requirements could slow subscriber additions.
- Future pricing interventions or new levies pose ongoing uncertainty.
3. Competitive and Market Risks
- Rising competition from Airtel, Glo, and new MVNOs could pressure margins in voice and data segments.
- Continued macro volatility (FX pressure, inflation) may affect consumer affordability and operating costs.
Outlook and Guidance
- MTN has upgraded FY 2025 guidance, projecting service revenue growth of at least low-50% and EBITDA margins of 53–55%.
- Medium-term targets include low-20% revenue growth, driven by fintech monetisation, enterprise solutions, and expanded 4G/5G coverage.
- Management expects to restore balance sheet strength by Q3 2025 and maintain strong free cash flow to support dividends and debt service.
Investment View
MTN Nigeria’s H1 results highlight strong fundamentals, market leadership, and a scalable growth model supported by CAPEX-driven network quality and digital expansion. The company’s successful pivot to data and fintech services enhances revenue diversity and margin potential. While regulatory and funding risks persist, the earnings recovery and improved liquidity position MTN as a core telecom play in Sub-Saharan Africa.
For long-term investors, MTN Nigeria remains attractive for growth and dividend yield, assuming execution on CAPEX efficiency and regulatory navigation.
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.