MTN Nigeria's growth engine stalled in second quarter - Karl Toriola — MTN Nigeria Communications CEO Karl Toriola

MTN Nigeria’s half-year results can be read two ways, and the company would much prefer the first one.

That version is a triumph: ervice revenue up 25.9% to ₦3-trillion (around R35-billion at the naira’s end-June rate); earnings before interest, tax, depreciation and amortisation up 39.2%, with the margin widening more than five percentage points to 55.9%; profit after tax up 70.6%; and an interim dividend of ₦26/share, more than the company paid out in the whole of last year.

The second reading is much uglier, and investors appear to have taken notice, sending MTN Group’s share price crashing more than 7% in morning trade in Johannesburg on Friday, after the Nigerian results were released.

Almost all of the growth momentum belongs to the first three months. Service revenue grew 41.8% in the first quarter and 13.2% in the second. Data growth more than halved, from 56.2% to 24.9%. Voice, up 12% across the half, managed 3.1% in the quarter.

To be fair, CEO Karl Toriola warned investors in April that growth would normalise. In January 2025, the Nigerian Communications Commission approved a 50% tariff increase — the first Nigerian operators had been allowed since 2013 — and MTN began passing it on the following month. Measure the first half of 2026 against a pre-increase base and you get 25.9%. Measure the second quarter against a post-increase base and you get 13.2%.

The problem is that MTN’s own medium-term guidance is service revenue growth of at least low-20%.

XtraTime

Then there is XtraTime, the product where MTN fronts subscribers with credit, allowing them to settle up on their next recharge. On 16 April, MTN switched it off after the Federal Competition and Consumer Protection Commission issued rules in 2025 that swept airtime advances in alongside digital money lenders, requiring registration and approval. MTN said it did “not expect the temporary suspension to have a material impact”.

Fintech revenue fell 72.4% in the second quarter, from ₦47.1-billion to ₦13-billion. With the product dark but the loans still outstanding, the charge for expected credit losses on trade receivables jumped from ₦2.98-billion to ₦15.97-billion. Another ₦3.2-billion was written off altogether, described by MTN as historical reconciliation variances from legacy system issues. Mobile money underneath it all did well — revenue up around 132%, active wallets up 1.3 million to five million — and it barely touched the hole.

XtraTime is back now. Optasia, the South African firm that runs the lending platform on MTN’s behalf, restarted on 24 June and the notification texts went out to subscribers in July. The outlook section says operations have recommenced and expects the business to rebuild through the rest of the year.

But nine days before the release of the half-year accounts, the federal high court in Lagos threw out an industry challenge to the regulations and upheld them, while finding the commission has no power to license telecommunications operators. The commission announced the same day that enforcement was back on. An appeal, and an application to halt enforcement in the meantime, followed within 24 hours.

The third story is the one that makes the dividend possible — and is remarkable: 18 months ago, MTN Nigeria was insolvent, at least on paper. The naira’s collapse produced a ₦925.4-billion foreign exchange loss in 2024 and a ₦400.4-billion loss for the year, leaving shareholders’ equity at negative ₦458.3-billion. A year ago it was still negative, at ₦42.5-billion.

It now stands at a positive ₦930.6-billion. Accumulated losses of ₦192.9-billion have turned into retained profit of ₦793.1-billion. Foreign currency debt, at US$105-million as recently as December, is gone entirely. The naira closed the half at ₦1 380/$ against ₦1 530 a year earlier, converting last year’s exchange losses into a ₦36.4-billion gain.

Investors have noticed. The share price ended the half at ₦720, up 40.9% since December, valuing MTN Nigeria at roughly $11-billion. But the ₦26 interim dividend is 77% of half-year earnings — a payout calibrated during a quarter of 40% growth, to be funded by a business now growing at 13%. In other words, the regulator that took three-quarters of a quarter’s fintech revenue off the table has just been told by a court that it may carry on.