MTN Nigeria 2025 9-Months: A Hold For Long-Term Investors Amid Recovery, Stable Shareholder Value

Quarter Under Preview: 9-Months

Current Share Price: N477

Latest Final Dividend: N10.00-2022

Latest Interim Dividend: N5.60- 2023

Estimated Beta Value: 0.77x

Estimated Intrinsic Value: N301.03

Analyst: Jeariogbe Tunde Segun

THE COMPANY

MTN Nigeria Communications Plc is a Nigeria-based company engaged in the business of building and operating Global System for Mobiles (GSM) cellular network systems and other related services across the country. It offers broadband fixed wireless access services, telecommunication services and mobile financial services, operating through three segments: Consumer Business Unit, Enterprise Business Unit and Wholesale Business Unit.

The Consumer Business Unit segment consists of subscribers sitting on value propositions and tariff plans dedicated to three sub-segments: Youth, High Value and Mass segments. The Enterprise Business Unit segment offers products and services tailored towards the everyday business needs of corporate and small-medium organizations, while the Wholesale Business Unit segment serves customers who buy telecom products  (mobile or fixed) in bulk with the intention of re-selling same to their external clients.

Financials

Over the past two financial years, the giant telecommunication company has reported losses, and according to the figures released through the Nigerian Exchange Limited platform, the losses were largely due to the Net Foreign Exchange Losses the company suffered. The effect of this was so much as it threw shareholders’ equity into a negative position.

From the beginning of the 2025 financial year, the management of MTN Nigeria has reported positive earnings quarter on quarter. This report therefore reviews the 2025 nine-month score-card and attempts to help the read form an informed opinion about the investment proposition depending on risk tolerance level.

At the end of the first nine months of the ongoing year, the management of MTN Nigeria reported a Turnover N3.732 trillion, a 57.48% improvement on the N2.370 trillion reported at the similar period of 2024. Direct Cost of Sales amounted to N1.040 trillion, versus N902.077 billion in the 2024 nine months. Operating Profit is estimated at N1.441 trillion, as against N475.304 billion, while Operating Expenses stood at N768.742 billion. Finance Cost through the nine months is valued at N404.180 billion, against N303.374 billion in the similar first three-quarters of 2024.

Plus and minus, the company’s management achieved a Profit before Tax of N1.226 trillion, as against the Loss before Tax in the corresponding period. In all, the Profit for the period stood at N750.185 billion, a 245.69% recovery from the loss of the period under review. See the below table for details:

Current Assets of MTN Nigeria at the end of the 9-months periood is same as N1.031 trillion, as against N624.006 billion in 2024. Non-Current Assets rose by 16.47% to N3.963 trillion, up from N3.402 trillion in the similar period of last year.

Thus, Total Assets is now valued at N4.994 trillion, just as Current Liabilities through the period came to N2.034 trillion from N2.119 trillion at the 2024 financial year. Non-Current Liabilities stood at N2.666 trillion against N2.481 trillion, following which Total Liabilities is now estimated at N4.701 trillion, compared to N4.600 trillion at the end of 2024. Consequently, Net Assets is N293.136 billion, compared to the previous negative position. Similarly, the company reported a Retained Earnings turned green at N142.719 billion. See the above table for details.

Financial Strength

1. Debt Ratio: The Ratio is now 94.13% from a higher 114.24%
2. A 94.13% Debt Ratio means 94% of MTN’s assets are financed with liabilities, leaving only approximately 6% as equity contribution.
3. The drop from 114.24% to 94.13% is a positive development, meaning the company’s leverage level has reduced.
4. Previously, liabilities even exceeded assets, implying negative equity, (technically, the company was insolvent on paper due to FX translation losses)
5. This means that MTNN is still highly leveraged, but there is an improvement. The improving ratio signals recovery in equity value and stability in the company’s balance sheet.
6. Total Debt to Equity Ratio: Soared from a negative of 802.06% to 1,603.76%, the implications of which we interpret below:
   1. This ratio is extremely high because MTN’s equity base is still small relative to debt
   1. The previous figure being negative confirms the company’s Negative Equity position having been eroded by the earlier highlighted Fx losses.
   1. Currently, it is noteworthy that equity has turned positive again, following which the ratio transforms from negative to a very large positive number.
   1. This implies that, although MTN’s financial structure is still debt-heavy, the restoration of positive equity is very significant, and supports the followings:
      1. The return to profitability
      1. Management’s confidence in resuming dividends payment, and
      1. The possibility of future credit rating stability
      1. Nevertheless, it still indicates a high financial risk exposure, especially in terms of currency fluctuations
7. Equity Ratio: The drop from a negative 14.24% to 5.87% can be interpreted as follows:
   1. MTN now finances only 65 of its assets with equity, which is still very thin
   1. However, previously, equity was negative. As such, this is a major balance sheet recovery milestone.
   1. Thus, we can say that the equity base has returned to positive territory, even as it is till weak, making MTN Nigeria:
      1. Highly sensitive to currency movements
      1. Dependent on strong operating cash flows to support debt servicing
      1. However, the fact that the ratio has moved from negative to positive is evidence of some financial healing efforts
8. The Beta Value: The Estimated Beta Value for MTN is now 0.77x. It is important to understand that a Beta of less than 1 as in this case means MTN’s stock is less volatile than the overall market, which implies that:
   1. Investors view it as a defensive stock, with stable earnings, strong market dominance and reduced volatility. This is consistent with;
      1. The company’s large subscriber base in the Nigerian telecom sector
      1. Which accounts for its strong revenue earning capacity from both voice and data
      1. Helped by Nigeria’s essential and growing telecom demand

In our opinion, despite the financial leverage, MTN’s market behaviour remains stable, as investors see it as a long-term defensive, rather than speculative stock.

Profitability Ratios

1. EBITDA Margin: The ratio moved from 20.05% to the current 38.63%, and the implications are as noted below:
   1. The sharp improvement to 38.63% shows a strong growth in operating profitability. This is driven by its:
      1. Higher data and FinTech revenue
      1. Better cost optimization, and
      1. Reduction in network and administrative cost pressure

Thus, we can deduce that: MTN Nigeria’s underlying business is very strong, even before the financial distortions, showing a robust earnings quality.

• Pre-Tax Margin: This ratio is currently valued at 32.86% from the previous -30.12%, implying:
  • A shift from negative pre-tax margin to +32.86% confirms that the company has moved from loss-making to positive territory
  • Previously, FX losses wiped out operating profits, hence the negative numbers
  • With FX losses eased or currency stabilized, true earnings are now visible

This is a turnaround signal. MTN is again generating solid profit before tax, strengthening cash flow and dividend sustainability.

• Direct Cost of Sales to Turnover: Is estimated at 27.88% from 38.06% thus:
  • Cost of Sales relative to Turnover has reduced significantly
  • Meaning that MTN is becoming more cost-efficient, and
  • Implies evident improvement in margin discipline, better pricing and volume growth

This means that: The company is effectively controlling network operating costs and improving gross profit margins

• Return on Equity: Currently estimated at 255.92% Versus 89.78%. the ratio is interpreted as follows:
  • ROE is extremely high because equity remains small, despite the company turning the corner
  • The jump signals strong recovery in net earnings
  • But it also reflects leverage risk and not just performance.

It is improtant to also note that very high ROE is good, but it is inflated by the small equity base caused by the FX erosion. This means that MTN is profitable, but still financially leveraged and sensitive to currency movement.

• Return on Assets: This Ratio is now estimated at 15.02% against -12.79%, as a result:
  • ROA turning positive confirms that assets are now generating positive earnings
  • At 15% ROA is strong for the Nigerian telecom sector, which is asset intensive

MTN is using its asset base much more effectively, signaling a recovery in true business performance.

Efficiency Ratios

1. Operating Expenses to Turnover: currently 20.59% versus 25.65% is interpreted below;
   1. This ratio shows how much of MTN’s revenue is consumed by operating expenses (opex)
   1. A decline means MTN is now spending less per naira earned
   1. This improvement indicates:
      1. Better cost optimization and expense discipline
      1. Scale efficiencies from network expansion
      1. Possible renegotiation of vendor, infrastructure, or lease costs

MTN is operating more efficiently, with improved cost control and reduced overhead burden, supporting stronger profit margins. This is consistent with EBITDA margin improvement noted earlier.

• Turnover to Total Assets: Now at 74.74% Vs 58.86%. This ratio measures how effectively MTN uses its assets to generate revenue.
  • A rise in this ratio as seen in MTN means the company is now generating more revenue from the same asset base.
  • It is important to understand that several drivers contributed to this:
    • Growth in data usage and fintech adoption across the country
    • Increased average revenue per user (ARPU)
    • Better utilization of the 4G/5G network infrastructure

MTN Nigeria’s assets are now being used more productively, reflecting stronger operational momentum and supportive market demand. In simple terms, they are getting more output from the same network infrastructure, meaning efficiency gains.

Profitability Ratios

The share price of MTN Nigeria at the time the score-card was released gives us its market perception and valuation picture, especially when the company already released several negative numbers before this time. The sharp rise in share price reflects renewed investor confidence which the market is responding to: return to profitability, reinstated dividend payments, improved operating margins and a stable Fx environment. In other words, the market has already priced in the recovery, just as sentiment has turned from fear to confidence.

1. Earnings per Share EPS: Now N35.73, against -N24.53. It is important to note: The movement to EPS from negative to strong positive confirms a real and substantial recovery in the company’s financial health. The positive EPS reflects;
   1. Strong service revenue growth
   1. Controlled costs
   1. Reduced FX impact

MTN Nigeria has restored profitability, and the business model is generating real earnings, rather than accounting gains.

• P/E Ratio: 14.56x from -7.14x:
  • A negative P/E previously signaled loss
  • Now at 14.56x, MTN is trading at a fair valuation relative to earnings
  • In the telecom sector, a P/E range of 10x-18x is generally reasonable

Thus, the current P/E indicates the stock is fairly valued, not overpriced. Investors are paying for stable cash flows and renewed growth prospects.

• Earnings Yield: 6.87% Vs 14.01%: A positive P/E means the stock now provides real return on capital again. Previously negative yield reinforced that investors were losing value on earnings basis. In other words, MTN now creates shareholder value instead of destroying it.
• Book Value per share: N13.96 versus -N27.32: Book Value turning positive is very important, it confirms equity has recovered. However, Book Value remains very low compared to the share price of N520 meaning:
  • The company is highly leveraged
  • Market valuation depends heavily on future earnings, not asset replacement value.
  • Thus, the balance sheet is no longer distressed, but the equity base is still thin. This matches the very high ROE we saw earlier.

Final Verdict/Investment Recommendation:

MTN Nigeria has successfully moved from a period of FX-driven losses to a clear profitability recovery, supported by strong revenue fundamentals, improved operational efficiency, and reinstated dividend confidence. The share price appreciation is justified by earnings recovery and market trust. However, the company remains highly leveraged, and therefore still sensitive to currency fluctuations. This remains the primary risk to forward performance.

Although we are of the opinion that the share price of MTN Nigeria is rightly priced based on sentiment and investors preference, we maintain a conservative valuation approach, and the intrinsic value of N301.03 each which is lower than the current market price on each unit of its shares. Nevertheless, on the strength of the recovery and all analyzed so far, we have rated the stock a Hold with accumulate bias. For long-term investors, gradually accumulate, especially on price dips. For short-term traders, expect moderate upside, tied to FX stability and policy environment.