Mtn Nigeria Communications Plc · NSENG:MTNN
Mtn Nigeria Communications — Q1 2020 Earnings Presentation
43 slides from Mtn Nigeria Communications's earnings presentation, May 2020
Slide 1: Q1 2020 Investor Presentation
Q1 2020 Investor Presentation May 2020 Sensitivity: Internal
Slide 2: Agenda
Agenda 1 Operational Review 2 Strategic Review 3 Financial Update 4 Looking Ahead 2
Slide 3: Operational Review
Operational Review
Slide 4: MTN Nigeria
MTN Nigeria Leading mobile operator in Nigeria Largest Mobile Operator 68.5 #1 26.8 49% million NPS million Market subscribers share by Active revenue (1) data users 48% 79% 39% 43% Source: WCIS 4G Population 3G population Data Smartphone coverage coverage penetration penetration Largest fibre netwo
Slide 5: Strong Position in Attractive Market
Strong Position in Attractive Market MTN Nigeria is the clear market leader Leader in the Nigerian Telecoms Market with a Strong Competitive Advantage across all Segments Undisputed Market Leader MTNN - Subscriber and ARPU leader Subscriber Market Share in Feb 2020A ARPU (NGN) (1) (2) (1) #4 Player
Slide 6: Exciting Market Opportunity
Exciting Market Opportunity Young population & mobile penetration and data usage upside Largest Telecoms Market in Africa Historical (15A-20A CAGR) Forecast (20A-25E CAGR) Mobile subscribers in millions, 2019A Penetration Median Age 90% 191% 94% 103% 79% c.20 million population 19 20 28 41 increase
Slide 7: Well-positioned for the Long-term
Well-positioned for the Long-term Unmatched nationwide coverage and high quality network Leading Mobile Network Kano Coverage by Population 1 2 3 4G Coverage (48%) Most expansive network coverage amongst peers 3G Coverage (79%) Best Coverage Abuja 2G Coverage (88%) Best network quality with high
Slide 8: Leading Commercial Proposition
Leading Commercial Proposition Leading commercial proposition allows MTNN to attract customers across all segments and focus on high value segment Largest Distribution Network Nationwide Leading Brand in Africa Multichannel Customer Service Largest Physical Distribution MTN USSD & MyMTN App Call Cen
Slide 9: Balanced Structure with Versatile Team
Balanced Structure with Versatile Team Chief Finance Officer Executive: Human Resources Combined telco experience of Modupe Kadri Esther Akinnukawe over 200 years Joined MTN: 2007 Joined MTN: 2012 Years of telco experience: 12 Years of telco experience: 7 Deep local expertise and Company Secretary G
Slide 10: Key Milestones
Key Milestones Key Highlights & Challenges ▲ Launched very ▲ Obtained approval to ▲ Paid first dividend as a ▲ Conducted trial of ▲ Launched Turn it Up affordable smart utilize 800MHz spectrum public company 5G technology campaign feature phones to drive ▲ Rolled out 4G+ services ▲ Included in MSCI1
Slide 11: Recent Developments
Recent Developments Impact of COVID-19 Impact on MTN Nigeria Response from MTN Nigeria Covid-19 impact on global economies Volatility of oil prices placing pressure Activated business continuity plan on FX environment and implemented extensive response Dampened activity with fear factor meas
Slide 12: Operational Highlights
Operational Highlights Strong performance supported by voice and data growth Subscribers(1) Investment Growth drivers +6.5% QoQ N175.3bn LTM +3.9% QoQ 68.5m Capex(2) Voice N24.8bn Traffic Total Subs +13.6% YoY +7.2% YoY Capex 14.4% LTM intensity 26.8m +6.6% QoQ 7.5% mb per +0.7% QoQ Active data acti
Slide 13: Strategic Review
I H lt Strategic Review
Slide 14: Building a Digital Operator
Building a Digital Operator The evolving telco The digital player MTN Nigeria The Digital Operator Digital Voice Data Enterprise Wholesale Rich media, content VAS & mobile advertising, MusicTime and Ayoba Digital, Data and Fintech outpacing voice and other segments The fintech player (Q1 2020 YoY se
Slide 15: Unlocking Opportunities Across the Curves
Unlocking Opportunities Across the 6 Curves the consumer, enterprise and wholesale market segments Consumer Positioning Rapid scale Accelerating Broadening Accelerating Sustaining VOICE DIGITAL on a FINTECH on DATA as next ENTERPRISE WHOLESALE growth sustainable expanding agent wave of growth ecosys
Slide 16: Sustaining Voice Growth
Sustaining VOICE Growth Voice Revenue Key Drivers Wide network coverage and availability +3.2% +7.4% Rural site roll-out drive QoQ YoY Optimization of SIM registration and distribution network Easier access to recharge supported by MTN TOP IT channels Enhanced customer acquisition offers i
Slide 17: Accelerating Data as Next Wave of Growth
Accelerating DATA as Next Wave of Growth Key Drivers Data Revenue Revamped data pricing in line with market +12.3% +59.2% Revamped commission and discount structures QoQ YoY Extended 4G coverage following the unlocking of 800MHz Introduction of smart feature phones Upgrade of 3G SIMs to 4G
Slide 18: Positioning Digital on a Sustainable Growth Path
Positioning DIGITAL on a Sustainable Growth Path Digital Revenue Key Drivers Improved customer journey and experience on value-added services +8.0% +63.7% Increasing data adoption QoQ YoY Increasing awareness of digital services Rich portfolio of digital services including our rich media off
Slide 19: Rapid Scale Fintech on Expanding Agent Network
Rapid Scale FINTECH on Expanding Agent Network Fintech Revenue Key Drivers Increased adoption of MTN Xtratime +10.8% +36.1% Synergies with growing digital services QoQ YoY Synchronised products distribution and channels across the business Expanding agent network: 178k registered agents (+70
Slide 20: Broadening Enterprise Ecosystem
Broadening ENTERPRISE Ecosystem Enterprise Revenue Key Drivers Penetration across different markets +0.5% +12.7% Deployment of vertical solutions across segments QoQ YoY Expanding channel coverage for SMEs Enhanced partner ecosystem especially with relevant ICT players Cost efficiency driv
Slide 21: Accelerating Wholesale Business
Accelerating WHOLESALE Business Wholesale Revenue Key Drivers Monetising existing infrastructure -1.1% -5.3% Huge capacity demand QoQ YoY Satellite to fibre migration Fast growth in digital services Increasing need to invest in infrastructure efficiently Harnessing opportunities by lever
Slide 22: Financial Update
Financial Update
Slide 23: Financial Highlights
Financial Highlights Strong financial performance in Q1 2020 Service Revenue Voice Data Opex N328.5bn N227.0bn N74.1bn N95.6bn +16.7% +7.4% +59.2% +22.3% YoY YoY YoY YoY EBITDA EBITDA Margin Free Cash Flow EPS N173.5bn 52.7% N98.1bn N2.5k +15.3% -0.6pp 11.8% +5.6% YoY YoY YoY YoY LTM Final FY19 divi
Slide 24: Service Revenue, EBITDA and Capex (IFRS 16)
Voice and data drive strong revenue growth, relatively stable margin with operational leverage Service revenue EBITDA and Capex (IFRS 16) (NGN bn) (NGN bn) 53.3% 52.7% EBITDA Margin YoY Growth 16.7% 22.2% 22.9% Capex Intensity (1) 328.5 20.5% 7.5% Capex Intensity (2) 11.6 3.2 11.1 281.5 1.6 3.5 173.
Slide 25: Total Revenue
Total Revenue Revenue growth on track Total Revenue Split Commentary (NGN bn) Improved network coverage and availability YoY Growth 17.4% 12.6% 16.7% Q1'19 Revenue 282.1 Segmented customer value 1,169.8 management activities 49.7 12.2 1,039.1 48.2 12.1 329.2 Voice 15.7 driving subscriber 5.5 3.2
Slide 26: Cost Breakdown: Cost of Sales
Cost Breakdown Cost of sales Cost of Sales Split Understanding Cost of Sales (NGN bn) Increase in cost of sales slower than revenue growth Gross 79.2% 81.1% 81.3% 81.1% 81.8% margin Marginal improvement in gross margin by 0.7pp to 218.8 60.0 198.9 81.8% 184.0 18.7 53.5 4.9 Other 13.3 8.4 23.1 26
Slide 27: Cost Breakdown: Operating Expenses
Cost Breakdown Operating expenses (Opex) Understanding Opex Opex intensity 40.2% 39.3% 27.5% 27.7% 29.0% Growth in operating expenses driven mainly by an increase in lease rental costs Opex Split 356.1 408.5(1) 321.1(2) 78.2 95.6 (NGN bn) Increase in lease rental costs due to an aggressive Other
Slide 28: EBITDA
EBITDA Revenue driving growth in EBITDA (NGN bn) +15.3% EBITDA 53.3% 52.7% Margin 28
Slide 29: Capital Expenditure Breakdown
Capital Expenditure Breakdown 4G network expansion driving investment in capital expenditure NGNbn Capex Allocation (%) ROU (1) 43.6 4.9 50.6 225.3 208.3 1.7% 57.7 184.2 30.3% Network IT 25.4% Capex 20.5% Right of Use Assets 24.8 Other 0.8% 17.8% Capex 67.1% 17.7% Intensity 7.5% 2017 2018 2019 Q1'19
Slide 30: Cash flow
Cash flow Strong cashflow position & working capital efficiencies (NGNbn) 27.0 22.0 - 25.1 173.5 99.4 (1) (2) EBITDA Capex Change in Net Net Interest Paid NCC Fine Repayments Levered FCF Working Capital 53.3 150.4 34.2 20.7 55.0 (12.8) (1) (2) EBITDA Capex Change in Net Net Interest Paid NCC Fine Re
Slide 31: Capital Structure Overview
Capital Structure Overview (NGN bn) Overview and Financing Strategy Debt Evolution MTNN has historically maintained moderate leverage; remains in a comfortable position Total 410 (1) 255 175 413 (1) relative to covenants on current : Debt 296 – Interest Coverage of 10.8x (excl. financial leases) 2
Slide 32: Looking Ahead
Looking Ahead
Slide 33: Investing for Sustainable Growth
Investing for Sustainable Growth Voice Data Digital Fintech Enterprise Wholesale Further targeted Focus on 4G Improve customer Scale our agent Deepen enterprise Monetize existing segment value coverage journey and network penetration across infrastructure propositions experience differen
Slide 34: Enabling Broader Economic & Social Development
Enabling Broader Economic & Social Development Carrier of carriers to 20 Million 1 Enabling over Invested over Each month, over N21 billion in 16million people 100+ ISPs, Nigerians live in Billion with no airtime Carriers & ICT places where MTN is rapid & expedient over 860 projects, connect with th
Slide 35: MTN Nigeria Investment Case
MTN Nigeria Investment Case Strong Exciting position in the demographic right market opportunity • Largest African economy • Fast growing youthful population • Largest telecoms market in Africa • Low data, fintech and digital adoption • Clear leader in mobile market • Large unbanked segment Clear st
Slide 36: Appendix
Appendix
Slide 37: Driving growth and profitability
Driving growth and profitability Service Revenue Growth EBITDA Growth Strong Capex Investment (1) (NGN bn) (NGN bn) (NGN bn) Growth 16.7% 15.3% (%) 81.0% 81.8% 53.3% 52.7% 20.5% 7.5% 58 282 329 150 174 25 Q1'19 Q1'20 Q1'19 Q1'20 Q1'19 Q1'20 Revenue EBITDA % Margin Capex Capex Intensity Increasing Ne
Slide 38: Attractive Return Profile (FY19)
Attractive Return Profile (FY19) Driving growth and profitability Service Revenue Growth EBITDA Margin Expansion Strong Capex Investment (NGN bn) (NGN bn) (NGN bn) Growth 11.6% 17.4% 12.6% -9.2% 25.4% 45.2% (%) 79.2% 81.1% 81.3% 25.4% 41.8% 53.9% 17.7% 17.8% 39.0% 1,039 1,170 885 630 225 184 208 346
Slide 39: Highlights of Income Statement
Highlights of Income Statement Q1 2020 YoY Growth FY 2019 % of Gross % of Gross Note(s) N 'mn Revenue % N 'mn Revenue Gross revenue 329,171 100.0% 16.7% 1,169,832 100.0% Direct network operating costs -70,364 21.4% 18.3% -242,012 20.7% Value added services -3,706 1.1% 7.9% -12,216 1.0% Cost of hands
Slide 40: Highlights of Financial Position
Highlights of Financial Position Q1 2020 2019 Assets % of Total % of Total Non-current assets 1,274,920,289 78.1% 1,263,107,084 82.8% Current assets 356,873,440 21.9% 262,463,460 17.2% Total Assets 1,631,793,729 100.0% 1,525,570,544 100.0% Non-current liabilities 992,949,227 60.9% 983,190,312 64.4%
Slide 41: Thank You
Thank You
Slide 42: Disclaimer
» Disclaimer This presentation has been prepared by MTN Group ("MTN") and MTN Nigeria Communications Pic or a successor entity (the “Company’, and together with its direct and indirect subsidiaries, the “Group”) to provide an overview of the Group. “Presentation” means this document, its contents or
Slide 43: Disclaimer | continued
“2 Disclaimer | continued The presentation includes market share and industry data obtained by MTN and the Company from industry publications and surveys and internal surveys. MTN and the Company may not have access to the facts and assumptions underlying the numerical data, market data and other in
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