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MTN NIGERIA COMMUNICATIONS PLC FY'22 Earnings release - Data business to remain growth driver

MTN NIGERIA COMMUNICATIONS PLC
Data business to remain growth driver
MTNN audited FY’22 earnings results were impressive and came in line with expectations.  The company maintained strong growth in topline across all quarters, while margins remained steady, despite strong headwinds within the year. The company reported revenue of ₦2.0 trillion (Vetiva estimate: ₦1.9 trillion) for the full year, which indicated a 22% increase y/y. The data business remained the primary driver for topline growth, as data turnover came in 47% higher y/y to print at ₦764 billion (Vetiva estimate: ₦759 billion). The company continued to make investments in expanding 4G coverage within the year and as such, data traffic remained on a rising path, with users taking advantage of the network’s availability.  Also, the company’s subscriber base saw net additions y/y, fully shaking off the impact of the NCC’s policy. In light of this, the company’s voice services recorded growth of 7% y/y to print at ₦1.0 trillion.
The company’s’ winning strategy has been to continually increase its network capacity to serve the ever expanding data market and attract traffic. We believe data demand will continue to wax on strong, and with the company’s set strategy to direct more traffic to its base, we expect the data business to maintain growth trajectory. Thus, we project revenue from the data business to print at ₦984 billion, up 29% y/y. The company’s voice service is also expected to record growth, albeit slower as this segment remains subject to stiff competition, given the growing preference for internet-driven, cheaper substitutes. Overall, we see 2023 revenue coming in at ₦2.4 trillion (up 20% y/y). Finally, our PAT expectation comes in at ₦437 billion, up 22% y/y. Overall, we estimate a target price of ₦300.84 per share and rate MTN a BUY.