MTN NIGERIA COMMUNICATIONS : MTN NIGERIA EARNINGS RELEASE Q1 2023

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MTN Nigeria Communications Plc

Unaudited results for the quarter ended 31 March 2023

MTN NIGERIA RELEASES UNAUDITED RESULTS FOR THE QUARTER ENDED 31 MARCH 2023

Lagos | Nigeria: 27 April 2023

Today, MTN Nigeria Communications Plc (MTN Nigeria) announces its unaudited results for the quarter ended 31 March 2023.

Salient points:

• Mobile subscribers increased by 9.4% to 76.7 million
  o Added 1.1 million subscribers in Q1 2023
• Active data users increased by 14.7% to 41.2 million o Added 1.7 million active users in Q1 2023
• Active mobile money (MoMo PSB) wallets increased by 1.2 million in Q1 to 3.2 million
• Service revenue increased by 20.5% to N565.9 billion
• Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 17.7% to N302.7 billion
• EBITDA margin declined by 1.3 percentage points (pp) to 53.3%
• Profit before tax (PBT) grew by 8.5% to N155.8 billion
• Earnings per share (EPS) rose by 3.8% to N4.94 kobo
• Capital expenditure (Capex) declined by 25.8% to N120.5 billion (down 47.8% to N42.4 billion, excluding the right-of-use assets)

Unless otherwise stated, financial information is year-on-year (YoY, Q1 2022 versus Q1 2023).

MTN Nigeria CEO, Karl Toriola comments:

Navigating a challenging operating environment

"We continued to experience headwinds in our operating environment in the first quarter of 2023. The impacts of the ongoing global macroeconomic and geopolitical developments on energy, food and general inflation were exacerbated locally by petrol and cash shortages experienced during the period. This placed additional pressure on economic activity, consumers and businesses. The private sector experienced the deepest contraction in March 2023 since the recovery from the COVID-19 pandemic, driving down the PMI index to 42.3 points from 44.7 points in February 2023.

The inflation rate in Nigeria rose to a 17-year high of 22% in March 2023, representing the third consecutive month-on-month increase in 2023, with an average of 21.9% in the quarter. In addition, supply chains were compounded by exchange rate volatility and the availability of foreign currency needed for capex. To curb rising inflation, the Central Bank of Nigeria (CBN)

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MTN Nigeria Communications Plc

Unaudited results for the quarter ended 31 March 2023

continued its monetary policy tightening, increasing the Monetary Policy Rate by 1.5pp to 18% in Q1.

In October 2022, the CBN announced the redesign and introduction of new naira notes in N200, N500, and N1,000 denominations, effective 15 December 2022. The CBN indicated that the new and existing currencies will remain legal tender until 31 January 2023, when the existing currencies cease to be legal tender. Banks' customers were encouraged to pay the existing currencies into their bank accounts to enable them to withdraw the new banknotes once circulation began. The limited availability of the new notes resulted in cash shortages, which impacted our customers' ability to recharge through physical airtime vouchers (affecting mostly customers who did not have access to digital recharge channels) and over- the-counter (OTC) transactions within our MoMo agent network. The cash shortages affected the broader macroeconomy, with a consequent significant impact on the private sector.

Against this backdrop, we continued to manage the business and invest in the resilience of our networks, expanding coverage and capacity with a focus on cost efficiencies and disciplined capital allocation. This underscored our strong commercial momentum and financial performance in line with our medium-term guidance.

Creating shared value for our stakeholders

We continued progressing on our Environmental, Social and Governance (ESG) journey as it remains at the core of everything we do. Regarding progress towards our net zero target, we will build on the work done in 2022, which reduced our Scope 1 and 2 emissions by 25%. This was achieved by leveraging the latest technologies and service partnerships to deliver greater energy efficiencies.

In furtherance of our work to build sustainable societies, we continue striving towards 50% women representation in the workplace by 2030, reaching 36.2%, up 0.8pp from December 2022. In addition, we continued to expand broadband access to drive digital inclusion.

We deployed N374.7 million into corporate social investment programmes in Q1 through the MTN Nigeria Foundation. These programmes included medical outreach to over 50,000 people in about 600 communities and the empowerment of 101 women through the Y'elloprenuer initiative. Furthermore, science laboratories in two public secondary schools were renovated and fully upgraded to aid the teaching and learning of science subjects.

At the Annual General Meeting held on 18 April 2023, the shareholders approved a final dividend of N10 per share (N203.5 billion). This brings the total dividend for FY 2022 to N15.6 (N317.5 billion), up 18.9% from 2021, demonstrating economic value added to our shareholders. The shareholders also approved a scrip dividend option as an alternative form of shareholder return to a cash dividend. Following the outcome of the scrip dividend election

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MTN Nigeria Communications Plc

Unaudited results for the quarter ended 31 March 2023

exercise, 641,047,053 new ordinary shares representing 79.8% of the FY 2022 final dividend will be issued and allotted once all requisite regulatory approvals have been obtained.

Solid commercial and financial momentum

Building on our momentum in Q4 2022, we delivered several key milestones as we grew our connectivity business and platforms. Our mobile subscriber net addition was 1.1 million in the quarter, demonstrating the effectiveness of our churn management initiatives and interventions to ramp up gross connections.

Active data subscribers rose by 1.7 million, benefitting from our efforts to drive data conversion in new and existing subscribers. During the quarter, we focused on enhancing the capacity and coverage of our 4G and 5G networks, which supported rising data traffic. Our total data traffic increased by 50.3%, while 4G traffic constitutes 81.6% (up by 5.5pp). In addition, we rolled out additional 170 5G sites in Q1, bringing the population coverage to 4% and expanding the network experience to more smartphone users.

We continued to progress in building our fintech ecosystem and executing its growth strategy by reopening the Nigerian Interbank Settlement System (NIBSS) interface for inbound and outbound transfers and strengthening our control systems, enabling us to accelerate full commercial activities and grow active wallets. As a result, active MoMo PSB wallets rose by

1.2 million in Q1 to 3.2 million, accounting for 43.2% of our fintech users. However, the impact of the cash shortages during the period slowed OTC transactions, resulting in a 31.1% reduction in our total fintech users to 7.4 million. However, our base began to recover towards the end of March as cash shortages eased.

Our strong commercial momentum underpinned the solid growth across all revenue lines. As a result, we recorded a 20.5% increase in service revenue in line with our medium-term growth guidance. We continued to unlock efficiencies and cushion the effect of the rising cost pressures through the disciplined execution of our expense efficiency programme. As a result, EBITDA grew by 17.7% while EBITDA margin declined by 1.3pp to 53.3% but remained within our medium-term guidance range.

As we manage the increased pressures in the macro economy and our business, we will continue to focus on extracting efficiencies and driving operating leverage to support growth in earnings, cash flow and returns over the medium term."

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MTN Nigeria Communications Plc

Unaudited results for the quarter ended 31 March 2023

Key financial highlights

Items (in millions)

Total Revenue

Q1 2023	Q1 2022	YoY
568,136	470,984	20.6%

Service Revenue		565,937	469,819	20.5%
Voice		277,610	258,766	7.3%
Data		227,840	162,731	40.0%
Digital		7,211	5,108	41.2%
Fintech		22,689	20,893	8.6%
Other Service Revenue		30,586	22,322	37.0%
Expenses		265,486	213,836	24.2%
Cost of Sales		91,987	79,569	15.6%
Operating Expenses		173,499	134,267	29.2%
EBITDA		302,650	257,148	17.7%
EBITDA Margin		53.3%	54.6%	-1.3pp
Depreciation & Amortisation		96,031	77,821	23.4%
Net Finance Costs		50,835	35,738	42.2%
Profit Before Tax		155,784	143,588	8.5%
Taxation		54,481	46,769	16.5%
Profit After Tax		101,303	96,819	4.6%
Profit attributable to:
Owners of the company		100,491	96,819	3.8%
Non-controlling interest		812	-
		101,303	96,819	4.6%
Capital Expenditure		120,547	162,484	-25.8%
Capital Expenditure excluding Right of Use Assets		42,371	81,165	-47.8%
Capex Intensity		21.2%	34.5%	-13.3pp
Capex Intensity excluding Right of Use Assets		7.5%	17.2%	-9.8pp
Free Cash Flows		182,103	94,664	92.4%
Mobile Subscribers		76.7	70.2	9.4%
Data Subscribers		41.2	35.9	14.7%
Fintech Subscribers		7.4	10.7	-31.1%
Ayoba		6.7	3.4	100.1%

Operational and financial review

Service revenue grew by 20.5% on solid voice, data, fintech and digital services growth. This was supported by the increased subscriber base and usage of our services. Our mobile subscriber base rose 9.4% to 76.7 million, the highest level since our operations commenced in 2001. However, the cash shortages experienced during the period impacted customers'

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