MTN Nigeria has said that banks are indebted to it to the tune of N40.3 billion as of the end of first quarter 2021 on the account of unstructured supplementary service data (USSD).

MTN informed that its digital revenue grew by 101 per cent and fintech revenue by 28.5 per cent as customers continued to adopt more digital products and services, a trend accelerated by the COVID-19 pandemic.

The firm, in its Q1 financial report, said the enterprise business continued its recovery from the impacts of the COVID-19 lockdown as the economy improved.

It, however, said service revenue for the enterprise was largely flat year-on-year (YoY) mainly due to the non-recognition of USSD revenue in Q1.

The telecommunications firm said normalised growth (excluding USSD revenue) was 2.6 per cent, adding that “we continue to engage with the Nigerian Communications Commission (NCC), Central Bank of Nigeria (CBN) and the deposit money banks (DMBs) to conclude the operational modalities for the new pricing framework that has been agreed upon for USSD services.

“The mechanism for and timing of the recovery of the industry-wide outstanding debts that exist for USSD services provided to the DMBs form part of this process. As of the end of Q1, N40.3 billion was due to MTN Nigeria. In the meantime, we continue to account for USSD revenue on a cash basis,” it said.

MTN said expenses rose by 14.8 per cent, mainly driven by a 19.2 per cent increase in operating expenses arising from an accelerated site rollout and the effects of Naira depreciation on lease rental costs.

It pointed out that the overall increase in expenses was partly mitigated by the comparatively moderate growth of 7.8 per cent in the cost of sales following the suspension of new SIM sales and activations. As a result, MTN said its EBITDA rose by 19.1 per cent, supported by revenue growth, with the EBITDA margin expanding by 0.9 pp to 53.1 per cent.

Going forward, the Chief Executive Officer, MTN Nigeria, Karl Toriola, said the firm’s 2021 priorities remain unchanged, with a clear focus on sustaining double-digit revenue growth, driving 4G network expansion and positioning our fintech business for accelerated growth to unlock its full value.

Toriola said the acquisition of an additional 800MHz spectrum positions us to deliver improved service speeds to Nigerians in support of the Government’s broadband initiative.

“We will continue to sustain our expense efficiency programme to strengthen our financial position and support margins. We remain in dialogue with the DMBs on a pricing option for airtime sales commission while diversifying our airtime recharge channels to offer our subscribers more options to purchase airtime and stay connected.

“We will pursue stronger and deeper stakeholder relationships and enhanced shared value across our stakeholder ecosystem while ensuring that our activities align with the Government’s development agenda. Environmental, social and governance (ESG) principles remain at the core of everything we do, with a focus on aligning our priorities to drive eco-responsibility, sustainable society, sound governance and economic value for all in Nigeria.”

MTN said following the commencement of SIM sales and activations, the initial run-rate of additions may be slower than usual due to new process requirements, system limitations and reduction of qualified locations for SIM registration.

The firm said while this may impact the rate of additions in the short term, “we are optimistic that the current processes underway will entrench a more robust and sustainable registration process as we reaccelerate subscriber growth over the medium term.

“As the economy continues its steady recovery from the effects of the COVID-19 pandemic that impacted the business in 2020, we anticipate that the base effects will partly influence our commercial and financial trends in the remainder of the year. Although the availability of foreign exchange remains a constraint, we strive to minimise its impact on the business. Finally, we will continue to manage and invest in the resilience of our business and networks as we monitor the longer-term economic potential impacts of the pandemic.”