MTN’s Capital Expenditure Rose By 159% To N202.4b In Q1 2025

… Telecom giant returned to profitability as Profit after tax soared to N133.7 billion from a negative of N392.7 billion in Q1 2024

HIGHLIGHTS

• Total subscribers increased by 8.2% to 84.1 million

• Added 3.2 million subscribers in Q1 2025

• Active data users rose by 13.0% to 50.3 million
  • Added 2.6 million active users in Q1 2025
• Service revenue grew by 40.5% to N1.0 trillion
• EBITDA¹ increased by 65.9% to N492.7 billion
• EBITDA¹ margin expanded by 7.2 percentage points (pp) to 46.6%
• Profit after tax of N133.7 billion (Q1 2024: negative N392.7 billion)
• Earnings per share of N6.38 kobo
• Capital expenditure (Capex), excluding leases, increased by 159.0% to                      N202.4 billion
• Positive free cash flow (FCF) of N209.9 billion

CEO’s Commentary – Karl Toriola:

“We are pleased with our performance in the first quarter of 2025, which reflects the continued execution of our strategic priorities and the resilience of demand for our services. Building on the momentum from Q4 2024, our Q1 results place us firmly on the path to restoring profitability and achieving a positive net asset position within the current financial year, while increasing our investments to improve network and service quality.

Challenging but improving operating conditions

Although macroeconomic uncertainties persist, we are encouraged by the relative stability of the naira during the period and the moderation in inflation following the rebasing of the Consumer Price Index (CPI) in January 2025. The exchange rate remained relatively stable at N1,537/US$ at the end of March 2025, while reported inflation was 24.2%.

During the quarter, we received regulatory approval for price adjustments, a critical enabler to sustain ongoing investment in the industry and maintain the quality of service for our customers. This has empowered us to accelerate network investments with N202.4 billion in capex (up 159%), focused on boosting capacity and improving user experience.

We also continued to explore efficiency-enhancing opportunities through infrastructure-sharing partnerships. A key milestone was the agreement between MTN Group and Airtel Africa to collaborate on passive infrastructure in Nigeria, enabling accelerated coverage and driving network cost efficiencies.

Solid commercial and financial momentum

Our commercial performance remained strong, supported by sustained investment in network capacity, solid demand, and proactive customer value management (CVM) initiatives. In Q1, we added 3.2 million new subscribers, bringing our total base to 84.1 million. During the same period, active data users rose by 2.6 million, increasing the base to 50.3 million and contributing to a 46.4% YoY growth in data traffic. This growth was supported by our disciplined approach to gross connections and churn management, as well as continuous innovation in customer value propositions.

We commenced phased implementation of the new tariff structure in mid-February 2025 across our data and voice bundles, with the majority of adjustments taking effect in March. While the full impact on usage and revenue is expected from Q2, early indicators suggest continued resilience in customer demand, aided by our targeted CVM initiatives.

Our fintech strategy recalibration was well-advanced during the quarter, with a deliberate focus on enhancing the quality of our ecosystem. Although this led to a 25.7% decline in our active wallet base to 2.1 million compared to December 2024, it enabled us to onboard more high-value customers and improve float levels, thereby enhancing the overall health and sustainability of the ecosystem.

As part of our long-term ambition to drive financial inclusion, we are launching a rural penetration strategy aimed at expanding access to financial services for underserved and financially excluded communities. We remain committed to improving the quality and engagement of our wallet base, while accelerating the development of advanced fintech services. These efforts are aligned with our strategic objective to build a more robust, inclusive, and scalable digital financial ecosystem.

Profitability recovery and balance sheet progress

Our strong commercial momentum drove broad-based revenue growth across core segments, including data, voice, digital services and fintech. Service revenue grew by 40.5%, supported by the late-quarter tariff adjustments.

Cost pressures were mitigated by our revised IHS tower lease agreement, which reduced foreign exchange (forex) exposure and capped price increases, as well as improved underlying expense efficiency initiatives. As a result, EBITDA increased by 65.9%, and the EBITDA margin expanded by 7.2pp to 46.6%, which aligns with our guidance. Notably, the stability in the exchange rate in Q1 versus December 2024 helped reduce forex losses.

Overall, we reported a significant turnaround in our bottom line, with a profit after tax of N133.7 billion versus a loss of N392.7 billion in the prior year. This performance reflects the successful delivery of the five strategic priorities we committed to at the Extraordinary General Meeting (EGM) held on 30 April 2024. As a result, our retained earnings improved to negative N474.1 billion (December 2024: negative N607.5 billion) and shareholders’ equity to negative N324.6 billion (December 2024: negative N458.0 billion). We also delivered a positive free cash flow of N209.9 billion, representing a decrease of 54.8%, mainly due to the accelerated capex in Q1 and the elevated prior-year FCF base, due to larger naira depreciation and accrual build-up in that period. We expect a progressive recovery in FCF as the full impact of the tariff increase is realised.

Outlook

We remain focused on executing our Ambition 2025 strategy, accelerating network investment, deepening digital and financial inclusion, and restoring shareholder value in a challenging but improving macro environment. We will continue to execute with discipline, agility, and a focus on sustainable growth.”

KEY FINANCIAL HIGHLIGHTS

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Performance review

Service revenue grew by 40.5%, reflecting the continued resilience in demand for our services and disciplined commercial execution. We are pleased with this strong performance, which has yet to reflect the full effects of price adjustments implemented toward the end of the quarter.

Data revenue rose by 51.5%, driven by active user base growth and higher data consumption. This benefited from some further support from the price adjustments and our ongoing network investments to enhance service quality. Data traffic increased by 46.4%, while average usage per subscriber grew by 29.5% to 12.8GB.

We added approximately 4.0 million smartphones onto the network during the quarter, bringing smartphone penetration to 60.7%, underscoring rising demand for high-speed data services. Our 4G network coverage expanded to 82.7% of the population (up 0.2pp), while 5G coverage remained stable at 12.7%, as we prioritised enhancing capacity over broadening coverage during the period.

We maintained market leadership in the home broadband segment, adding approximately 233k new subscribers in Q1 and bringing our total broadband subscriber base to 3.5 million. We leveraged our 5G fixed wireless access and fibre-to-the-home offerings, which enable reliable connectivity to meet the evolving digital needs of households and businesses. These efforts align with our commitment to expanding broadband access and accelerating digital inclusion across Nigeria.

Our focused strategy on subscriber acquisition, retention, and usage continued to support top-line growth in voice, in terms of which revenue increased by 27.7%, bolstered by price adjustments and sustained usage trends.

The enterprise business recorded a 55.2% increase in revenue, supported by growth in fixed connectivity, data services, and converged solutions. We continued to benefit from new customer acquisitions and strategic partnerships that enhanced our enterprise value proposition and scale.

Our digital services business delivered robust growth of 92.1%, underpinned by increased demand for rich media content and enhancements to the user journey. While monthly active users of rich media services (excluding ayoba) declined by 19.4% to 7.9 million compared to December 2024, due to platform optimisation initiatives, overall engagement levels improved. This led to strong revenue growth across both rich media and value-added services (VAS).

Fintech revenue increased by 57.9%, primarily driven by the strong performance of our airtime lending product (Xtratime) and higher float income, supported by the onboarding of high-value customers. The revamp of our customer acquisition strategy, which commenced in Q3 2024, allowed us to further optimise our incentives and customer engagement framework to strengthen qualitative performance, deepen service penetration, and enhance performance monitoring across our sales and distribution channels. 

Consequently, we observed a decrease in active wallets (down 25.7%), while agents and merchants increased by 47.7% and 23.6%, respectively, compared to December 2024. Float holding grew by 60.3% compared to December 2024, indicating improved quality of our wallet base and sustained underlying demand in the ecosystem. We are now prepared to invest and intensify qualitative field acquisition efforts, particularly in rural and underserved areas, in line with our financial inclusion objectives.

Operating expenses (opex) increased by 25.0%, primarily driven by the impact of naira depreciation on our lease-related costs, which account for 60–65% of total opex. The US-dollar component of our tower lease costs is referenced to the exchange rate on the first day of each quarter, which rose by 72.2% YoY, from N897.8/US$ at the beginning of Q1 2024 to N1,546.1/US$ on the first day of Q1 2025.

This impact was partly mitigated by the renegotiated terms of tower lease contracts, which helped reduce foreign exchange exposure and capped CPI-linked escalations, as well as by the VAT exemption on the energy component of the leases in line with the new Finance Act. Additionally, ongoing cost-efficiency initiatives supported the containment of overall operating cost growth.

As a result, EBITDA grew by 65.9%, and the EBITDA margin expanded by 7.2pp to 46.6%. Adjusting for the adverse effects of naira depreciation (estimated at 8.8pp), the underlying EBITDA margin would have been 55.4%, underscoring the strength of our operational fundamentals.

Depreciation and amortisation rose by 22.1%, mainly due to the increased right-of-use assets stemming from the revised tower lease agreements. Net finance costs increased by 44.0%, driven by higher interest rates on borrowings, larger lease liabilities following naira depreciation, and new lease additions related to the extension and renewal of tower lease contracts.

Encouragingly, net foreign exchange losses declined by 99.2% to N5.5 billion, reflecting the relative stability of the naira during the quarter—from N1,535/US$ at year-end 2024 to N1,537/US$ at the end of March 2025.

Overall, we recorded a strong recovery in our bottom line supported by the substantial reduction in forex losses, resulting in a profit after tax of N133.7 billion compared to a loss of N392.7 billion in the prior year.

Capex rose by 142.8%, including the effects of higher right-of-use assets following tower lease renegotiations. Excluding leases, capex increased by 159.0%, resulting in an 8.7pp increase in capex intensity to 19.1%, in line with the target range. Following regulatory approval for price adjustments for the industry, we accelerated capex deployment to support the stronger-than-expected growth in data traffic and enhance service quality and user experience. Despite the higher capex, we achieved a positive free cash flow of N209.9 billion, demonstrating disciplined capital allocation and strong cash generation.

Our funding and liquidity position remains solid, supported by a cash balance of N303.7 billion. Foreign currency exposure remains within manageable limits. We have largely settled the outstanding US$ Letters of Credit (LC) obligations, with only US$1.4 million remaining at the end of the quarter. Consequently, approximately 23% (December 2024: 28%) of the total debt is denominated in foreign currency, and the balance in local currency.

Our debt metrics are healthy and remain well within all our financial covenants, with a net debt-to-EBITDA ratio of 0.5 times and an interest cover ratio of 9 times as at 31 March 2025. These metrics position us well to meet our operational, financial, and investment obligations while maintaining flexibility to navigate the evolving macroeconomic environment.

Outlook

As we progress through 2025, we remain optimistic about our growth trajectory and the opportunities within our market. Our strong performance in the first quarter underscores our ability to navigate a complex and evolving macroeconomic environment while remaining steadfast in executing our strategic priorities.

Looking ahead, we anticipate continued momentum in service revenue, underpinned by strong demand for data and a proactive approach to customer value management. The recently approved price adjustments are expected to bolster revenue performance as their full effects materialise in the coming quarters.

We are accelerating the rollout of fibre-to-the-home connections to capture significant market growth in high-speed broadband. In parallel, we are also maintaining focused investment in network capacity and coverage to enhance customer experience and support medium and long-term growth.

In fintech, our renewed focus on rural penetration and refined incentive structures is expected to reverse the decline in active wallets in the coming quarters. Our continued focus on launching advanced services and enhancing the quality of our fintech ecosystem helps attract more high-value customers and sustain float growth. We remain confident in our growth potential and are committed to deepening financial inclusion in underserved communities.

We are encouraged by the improvements in Nigeria’s macroeconomic conditions, marked by increased forex liquidity, relatively stable naira, and easing inflation. However, the recent escalation in global geopolitical and trade tensions presents risks to the broader outlook.

Nonetheless, we reiterate our single-year guidance for FY 2025:

• Service revenue growth of ‘at least mid-40%’, as tariff adjustments take full effect.
• EBITDA margin of at ‘least mid-40%’, supported by disciplined cost management.
• Capex intensity in the upper teens, in line with our disciplined approach to capital allocation.

In terms of our balance sheet, we aim for a recovery in our retained earnings and shareholders’ equity positions to positive balances within the current financial year.

Additionally, we maintain our medium-term guidance framework. We expect service revenue growth of ‘at least 20%’ and a recovery in our EBITDA margin to ‘at least 50% over the medium term. We also anticipate capex intensity subsiding as it normalises over the medium term, following the expected acceleration in our capex deployment in 2025 to enhance network capacity and customer experience. 

The near-term uncertainties in our macro environment, including exchange rate and potential price elasticity from the new tariff implementation, may impact the trajectory of our recovery. We will monitor developments and update our stakeholders as appropriate as we continue to drive our growth ambitions.

With a disciplined approach and strong operational focus, we are well-positioned to deliver sustained growth and value. Together, we will continue to navigate the challenges and seize the opportunities ahead, ensuring that MTN Nigeria remains at the forefront of innovation, connectivity, and inclusive progress in Nigeria.

Karl Olutokun Toriola

Chief Executive Officer

About MTN Nigeria

MTN Nigeria is one of Africa’s largest providers of communications services, connecting over 84 million people in communities across the country with each other and the world. Guided by a belief that everybody deserves the benefits of a modern connected life, MTN Nigeria’s leadership position in coverage, capacity, and innovation has remained constant since its launch in 2001. MTN Nigeria is part of the MTN Group – a multinational telecommunications group which operates in 16 countries in Africa and the Middle East.

Visit www.mtn.ng  for more information