Earnings Update: MTN Nigeria Plc FY 2024 – Recovery in Sight.

Event

MTN Nigeria Plc (“the Group”) faced significant challenges during the fiscal year, particularly in H1 2024, when it grappled with high inflation, impact of NIN-sim linkage directive on customer base expansion, Naira devaluation affecting foreign obligations, and energy price volatility. Amid these challenges, tariff price remained unchanged, hence, protecting margins became increasingly difficult.

While these challenges persisted throughout the year, the Group saw some relief in H2 2024, returning to a net profit position as it implemented strategic measures. Key actions included resolving uncertainties regarding the N74.00 billion outstanding USSD debt with the support of regulator, recovered N19 billion in interconnect debt through the regulatory intervention, and renegotiation of tower lease agreements with IHS Towers. However, the improved performance in H2 2024 (net profit of N118.62 billion) was insufficient to offset H1 2024 net loss of N519.06 billion.

Outlook

After years of tariff stagnation, the Nigerian Communication Commission (NCC) approved a 50% tariff hike for telecommunication operators in February 2025. This long overdue approval provides MTN Nigeria Plc with the much needed relief to counter rising operational costs and potentially ensure sustained investments in network infrastructure and service quality.

Valuation

We retain our BUY recommendation for the stock with a revised fair value of N338.57. This valuation reflects our optimism for the Group’s prospect for 2025, and was derived using a blend of discounted cash flow (DCF), discounted dividend model (DDM), residual income (RIM), and enterprise valuation (EV/EBITDA) methodologies.

Please follow the link “MTN Nigeria Plc FY 2024 – Recovery in Sight” to view the whole report.

Thank you.