Last Update05 Aug 25
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.
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.
