• MTN Nigeria made over N1 trillion in revenue
  • Voice is still the biggest, most lucrative sector of telecommunications in Nigeria
  • Despite playing second-fiddle to voice in the revenue ranking, data subscription and revenue grew fast and well in 2018

On March 7, 2019, MTN Group made available its financial results for 2018. Some of the highlights from the results include news that the group is ready to increase its ownership of the Nigerian company from 20% to 35% by June 2019 and that MTN Nigeria made over N1 trillion in revenue.

We also reported that the group CEO, Rob Shuter, accused Nigeria’s Attorney-General, Abubakar Malami, of exercising "powers beyond his limit" by demanding $2 billion in tax arrears, something Shuter says he is not mandated to do.

Looking through the results, there are a few other interesting things we’ve analysed and that are very important. For one, they tell us a lot about the current realities of the telecommunications market in Nigeria and its role in the bigger picture for one of Africa’s largest companies. They also help put into perspective the role of certain technologies like the Internet and smartphones and how Nigerians use them.

Here are 5 important things we observed from MTN’s 2018 results.

1. Voice is still the biggest, most lucrative sector of telecommunications in Nigeria

Perhaps this is not news. However, what is interesting is the level of dominance that voice still has in the telecoms market. It contributed 75% to MTN Nigeria’s N1.036 trillion revenue, growing 18.7% from N659.76 billion in 2017 to N783.059 billion in 2018.

Voice users also increased by 5.9 million, making a total of 58.2 million subscribers who actively made calls and sent text messages in 2018.

In comparison, data contributed 15% to MTN Nigeria’s revenue, growing 39.3% from N108.132 billion in 2017 to N150.658 billion in 2018. More of this in the next point.

2. Data subscription and revenue are growing, and fast

Despite playing second-fiddle to voice in the revenue ranking and proving that the Nigerian market is a long way off from harnessing its potential, data subscription and revenue grew fast and well in 2018 -- a 39.3% uptick in data revenue is no mean feat.

The percentage of data subscribers also grew by 4.5 million to 18.7 million in total in 2018 -- and this is inclusive of people who spend just over 5 MB on the MTN network every month, although the segmentation of usage rate is still unknown.

This could mean a lot of things -- that companies focusing on marketing need to realise the size of the Internet in Nigeria within the grand scheme of things. A lot of people are still offline, and most of the people online are probably not heavy Internet users. Their data will very likely be prioritised towards education, social networking (Facebook), and/or low-quality content consumption.

3. The potential for telecommunications companies to invest in fintech in Nigeria is massive, but currently restricted heavily

For all the noise and attention (and growth) that fintech has enjoyed in Nigeria, telecoms companies like MTN still play a marginal role in it, despite the immense potential that lies in it for them, especially in mobile money. Fintech only contributed 3% to MTN Nigeria’s revenue in 2018.

The good news, however, is that the CBN will soon finalise its plans to issue Payment Service Bank licenses which telcos will greatly benefit from. MTN Nigeria CEO, Ferdi Moorman, says the company is already in talks with CBN to get final approval.

4. Nigeria still contributed the most subscribers and user base to the MTN Group, but South Africa generated more revenue (in Rand)

In all of MTN’s 21 markets, Nigeria has the most subscribers, at 58.19 million, while Iran comes second at 44.78 million (albeit through a joint venture with WiMAX). South Africa, on the other hand, contributed the most to the group’s revenue (in Rand) -- 44.658 million Rand, while Nigeria contributed 37.971 million Rand.

MTN reported its result in constant currency.

5. Airtel is giving MTN a run for its money in the fight for data subscribers

During the annual results conference call, Alastair Jones, a Partner at New Street Research, a research firm in London, asked why MTN’s data revenue slowed down in the second half of 2018. Rob Shuter, the CEO, replied "some network issues in December" which caused the company to lose some traffic, but also due to "some price competition, largely driven in our opinion from Airtel" who he says "are trying to demonstrate some short-term momentum considering their own capital market plans."

He added that "a few regulatory changes around auto-renewal of bundles etc. that had an impact."