MTN NIGERIA COMMUNICATIONS : MTN NIGERIA EARNINGS RELEASE FY 2022

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MTN Nigeria Communications Plc

Audited results for the year ended 31 December 2022

MTN NIGERIA RELEASES AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022

Lagos | Nigeria: 31 January 2023

Today, MTN Nigeria Communications Plc (MTN Nigeria) announces its audited results for the financial year ended 31 December 2022.

Salient points:

• Mobile subscribers increased by 10.5% to 75.6 million o Added 7.2 million subscribers in 2022
• Active data users increased by 15.3% to 39.5 million o Added 5.2 million active users in 2022
• Active fintech subscribers rose by 57.5% to 14.9 million

• 1. 2.0 million active mobile money (MoMo) wallets since the launch of PSB
• Service revenue increased by 21.5% to N2.0 trillion
• Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 22.0% to N1.1 trillion
• EBITDA margin increased by 0.2 percentage points (pp) to 53.2%
• Profit before tax (PBT) grew by 22.3% to N534.0 billion
• Profit for the year grew by 21.1% to N361.5 billion (excluding non-controlling interest)
• Earnings per share (EPS) rose by 21.3% to N17.79 kobo
• Capital expenditure (Capex) rose by 23.5% to N504.3 billion (up 18.6% to N361.0 billion, excluding the right-of-use assets)
• Proposed final dividend of N10 per share

Unless otherwise stated, financial information is year-on-year (YoY, full-year 2021 versus 2022).

MTN Nigeria CEO, Karl Toriola comments:

Navigating a challenging operating environment

"2022 was challenging due to global macroeconomic and geopolitical volatility, resulting in higher inflation, supply chain uncertainties, foreign exchange volatility and availability. In Nigeria, Inflation reached a 17-year high of 21.5% in November before moderating slightly to 21.3% in December, bringing the average for the year to 18.8% and putting pressure on consumer spending. To curb rising inflation, the Central Bank of Nigeria increased interest rates four times in 2022, bringing the Monetary Policy Rate to 16.5% - up by five pp during the year. This was further raised by 1pp in January 2023 to 17.5%.

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MTN Nigeria Communications Plc

Audited results for the year ended 31 December 2022

We continued to manage and invest in the resilience of our business and networks, expanding coverage and capacity with a focus on expense efficiencies and disciplined capital allocation. We became the first mobile network operator to launch a 5G network in Nigeria, providing coverage in key cities in the six geopolitical regions. Since its commercial launch in September 2022, we have rolled out 588 sites and brought the 5G network to 5G-enabled smartphones, starting with iPhone users.

In this regard, we made good progress towards the execution of Ambition 2025 while delivering commercial and financial performance in line with our medium-term guidance.

Creating shared value for our stakeholders

We are committed to creating shared value for our stakeholders in line with our Ambition 2025 strategy in which Environmental, Social and Governance (ESG) practices remain at the core of everything we do. In terms of eco-responsibility priorities, we advanced our work towards Net Zero as we continue to drive our Project Zero programme leveraging the latest technologies and service partnerships to deliver greater energy efficiencies, lower carbon emissions, reduce risks and improve cost controls.

In furtherance of our work to build sustainable societies, in 2022, we deployed approximately N2 billion into corporate social investment programmes through the MTN Nigeria Foundation to drive youth empowerment and address national priority issues. These programmes included medical outreach, scholarship awards and female entrepreneur training under the Y'elloprenuer initiative. Furthermore, solar-powered boreholes were donated to 34 communities, and 44 public secondary schools in 33 states and the Federal Capital Territory received fully furnished ICT and science laboratories.

In addition, we continued to expand broadband access in line with our Ambition 2025 to drive digital inclusion. Our broadband coverage at the end of 2022 was 87.9%, up by 3.4pp.

Compliance remains at the heart of our business and embedded in the strategic priorities that underpin our Ambition 2025 strategy. Accordingly, we are pleased to have been recognised by the Nigerian Exchange Limited as the listed company with the highest level of compliance with the Rules of the Exchange and other applicable laws and regulations. This follows our recognition by Federal Inland Revenue Services (FIRS) as one of the most tax-compliant organisations in Nigeria. These demonstrate our commitment to and track record of compliance and sound governance.

Our Road Infrastructure Tax Credit (RITC) project reached a significant milestone with the Federal Executive Council's approval to restore and refurbish the 110-kilometre Enugu- Onitsha Expressway. This has paved the way for the commencement of the project, which,

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MTN Nigeria Communications Plc

Audited results for the year ended 31 December 2022

once completed, will positively impact the lives of Nigerians and contribute to the country's overall economic growth.

Finally, we significantly increased our shareholder base through MTN's Offer for Sale, which was concluded on 31 January 2022, when the Securities & Exchange Commission's (SEC) clearance of the Offer allotment was obtained. The Offer was the first phase of a series of transactions to increase Nigerian ownership in MTN Nigeria. As part of this, MTN Group offered an incentive of 1 bonus ordinary share for every 20 ordinary shares allotted, up to a maximum of 250 bonus ordinary shares per investor. The qualified investors who hold some or all the shares allotted to them for 12 months until 31 January 2023 (the qualification date) are eligible to receive the incentive shares in their Central Securities Clearing System (CSCS) account after the requisite regulatory approvals are obtained.

Solid commercial and financial momentum

Our mobile subscriber net addition was 7.2 million for the year, representing a good recovery from the impact of an increase in churn in Q3 2022 and demonstrating the effectiveness of our churn management initiatives and interventions to ramp up gross connections.

Active data subscribers grew by 5.2 million and benefitted from our efforts to drive data conversion in new and existing subscribers. We accelerated the coverage and capacity of our 4G network in response to the rising data traffic, bringing 4G population coverage to 79.1% (up by 8.7pp). 4G traffic now constitutes 79.5% (up by 9.7pp) of the total traffic on our network.

We continued to progress in building our fintech ecosystem and executing its growth strategy with the commercial launch of our MoMo PSB in May 2022. Our active fintech users rose by

5.5 million to 14.9 million, of which approximately 2 million are active MoMo wallets. As planned, we reopened the Nigerian Interbank Settlement System (NIBSS) interface in Q4 temporarily suspended to enhance control systems, starting with inbound transfers into customer wallets. We are in the final phase of onboarding deposit money banks. The outbound phase will be completed in Q1 2023, accelerating full commercial activities and the growth of active wallets.

Our strong commercial momentum, supported by an accelerated investment in our network, enabled growth across all revenue lines. As a result, we recorded a 21.5% increase in service revenue, above the average inflation rate and in line with our medium-term growth guidance. Our ability to maintain service revenue growth while unlocking efficiencies through disciplined execution of our expense efficiency programme led to a 22.0% growth in EBITDA and a 0.2pp expansion in EBITDA margin to 53.2%, in line with our medium-term target range.

In line with our dividend policy and guided by our ambition to create shared value for our stakeholders, the Board of Directors has proposed a final dividend of N10 per share to be

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MTN Nigeria Communications Plc

Audited results for the year ended 31 December 2022

paid out of distributable net income. This brings the total dividend for the year to N15.60 kobo per share, an increase of 18.9%, delivering economic value to our shareholders.

In addition, we are exploring a scrip dividend option as an alternative form of shareholder return to a cash dividend, subject to regulatory and shareholder approvals. We anticipate that once regulatory approvals have been received, there will be further shareholder communication ahead of the Annual General Meeting (AGM) planned for 18 April 2023."

Key financial highlights

	Items (in millions)		FY 2022	FY 2021	YoY		Q4 2022	Q4 2021	YoY
	Total Revenue		2,012,272	1,654,299	21.6%		556,137	448,037	24.1%
	Service Revenue		2,006,184	1,651,341	21.5%		553,492	446,989	23.8%
	Voice		1,036,684	970,847	6.8%		282,909	248,390	13.9%
	Data		764,821	520,540	46.9%		215,165	151,916	41.6%
	Fintech		84,396	70,553	19.6%		23,158	20,317	14.0%
	Digital		22,047	13,439	64.1%		6,141	3,994	53.8%
	Other Service Revenue		98,236	75,961	29.3%		26,120	22,372	16.8%
	Expenses		941,907	777,228	21.2%		266,337	205,476	29.6%
	Cost of Sale		341,607	271,884	25.6%		93,373	71,413	30.8%
	Operating expenditure		600,300	505,344	18.8%		172,964	134,062	29.0%
	EBITDA		1,070,365	877,071	22.0%		289,799	242,562	19.5%
	EBITDA Margin		53.2%	53.0%	0.2pp		52.1%	54.1%	-2.0pp
	Depreciation & Amortisation		337,067	292,324	15.3%		94,181	76,166	23.7%
	Net Finance Costs		199,326	148,060	34.6%		62,319	51,062	22.0%
	Profit Before Tax		533,972	436,687	22.3%		133,299	115,334	15.6%
	Taxation		175,095	138,033	26.9%		43,462	36,992	17.5%
	Profit After Tax		358,877	298,654	20.2%		89,837	78,341	14.7%
	Profit attributable to:
	Owners of the company		361,532	298,654	21.1%		91,137	78,341	16.3%
	Non-controlling interest		(2,655)	-			(1,300)	-
			358,877	298,654	20.2%		89,837	78,341	14.7%
	Capital Expenditure		504,332	408,295	23.5%		125,330	147,221	-14.9%
	Capital Expenditure excluding Right of Use Assets	361,033	304,397	18.6%		109,251	137,941	-20.8%
	Capex Intensity		25.1%	24.7%	0.4pp		22.5%	24.7%	-2.2pp
	Capex Intensity excluding Right of Use Assets		17.9%	18.4%	-0.5pp		19.6%	18.4%	1.2pp
	Free Cash Flows		566,033	468,775	20.7%		164,469	95,341	72.5%
	Mobile Subscribers		75.6	68.5	10.5%		75.6	68.5	10.5%
	Data Subscribers		39.5	34.3	15.3%		39.5	34.3	15.3%
	Fintech Subscribers		14.9	9.4	57.5%		14.9	9.4	57.5%

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