Nigeria: MTN Nigeria Expands Data and Fintech Services Despite Currency Losses and Economic Challenges

MTN Nigeria’s Q3 2024 report reveals robust growth in data and fintech services, despite recording a substantial ₦514.9 billion after-tax loss, largely attributed to currency volatility. The loss underscores the cost of operating in Nigeria’s unpredictable economic landscape as MTN continues expanding its digital services.

Data Demand Surges, but Subscriber Numbers Decline

MTN Nigeria’s data revenue saw a 52.3% year-over-year increase, driven by rising demand for digital services such as streaming, social media, and remote work tools. The company reported a 40% increase in data traffic, with active users now averaging 11.3GB per month, up 31.2% from the previous year. This growth reflects Nigeria’s ongoing digital transformation, with mobile connectivity becoming essential in daily life.

However, MTN’s subscriber base has dipped to 77 million due to mandatory National Identification Number (NIN) linkages to SIM cards—a regulatory move that led to some disconnections. While MTN has made efforts to reconnect affected users, the challenge of balancing regulatory compliance with customer retention remains pivotal for sustaining its market position in Nigeria.

Fintech Growth, with Strategic Shifts in Mobile Money

MTN’s fintech unit reported an 18% revenue rise, bolstered by its mobile money platform, MoMo. Yet, active mobile wallets declined by 21.8% to 2.8 million, as MTN adjusted its strategy to prioritize higher-quality users over sheer volume. This shift includes streamlining agent networks and refining sales approaches to support sustainable growth. MoMo now enables cross-border remittances, catering to Nigerians with international transfer needs, though wallet activity reflects the economic challenges of scaling fintech services in Nigeria.

Forex Losses and Cost Inflation Hit Profitability

The steep depreciation of the naira has sharply impacted MTN’s finances, with unrealized forex losses playing a significant role in its after-tax loss. Currency devaluation, coupled with rising operational costs and inflationary pressures, has strained profitability, reducing MTN’s EBITDA by 5.3% year-over-year and pushing the EBITDA margin down to 36.3%. Increased energy costs and newly introduced taxes on leases further exemplify the financial pressures faced by Nigerian businesses, challenging MTN as it navigates cost inflation and currency instability.