Chima Nwaokoma: Call to discuss our Q3 financial results. As you know, the results were released last Friday. I am Chima Nwaokoma. I am responsible for investor relations. Joining me on the call today are Karl Toriola, our Chief Executive Officer, Modupe Kadri, our Chief Financial Officer, Ayham Moussa, Chief Operating Officer Bode Abifarin, our MoMo PSB CEO. We are also joined by Roy Mutooni, who is the Group Investor Relations Executive. As usual, Karl will begin with the business overview and hand over to Modupe to cover the financial highlights. After that, Karl will return to outline the priorities for the remainder of the year before we proceed to the Q&A session. Please note that the call is being recorded and all participants are in listen-only mode. During the Q&A section, kindly use the raise hand function to speak or submit your questions through the chat function.
Chima Nwaokoma: Finally, please note that the call is scheduled for an hour, and with that, I will hand over to Karl.
Karl Toriola: Good afternoon, everyone, those in the African time zone. Thank you for joining us. We appreciate your continued engagement and the opportunity to take you through our performance for the 9 months ending 30 September 2026. As Chima has indicated, our format today is straightforward. I will begin with the business overview. As usual, Modupe will take you through the financial overview, and as usual, I will return to cover our outlook and medium-term framework before we take questions, but Modupe will add some analysis for you. With that, let me get to it, beginning with the key messages. There are three messages from these results. First, we are in growth, reversing the optical slowdown in Q2, which was a once-off event due to the high base in Q2 2025, rather than a change in the underlying trajectory of the business.
Karl Toriola: This is reflected in the 19.7% service revenue growth in Q3, with monthly acceleration to 21.6% in the month of September, and the quarter-on-quarter growth for Q3 versus Q2 2026 was 8.4%. What matters most is the quality of that growth, which is increasingly volume-led, driven by more users, deeper data adoption, and higher usage. Let me put my second system, which is beeping as messages are coming in on mute. Thank you. The second message is, our 9-month EBITDA margin expanded by 5.5 percentage points to 56.9%, and the Q3 EBITDA margin was 58.7%. This reflects very disciplined cost management and continued delivery of our expense efficiency program, supported by a stronger naira and VAT input claims. Thirdly, our growth continues to convert into cash.
Karl Toriola: Free cash flow increased by 57.5% to NGN 1.2 trillion, even as we stepped up network investments and paid NGN 860 billion in dividends for the FY 2025 final dividends and the FY 2026 interim dividends. That is both of them combined were NGN 860.8 billion. Taken together, the results show that growth has regained momentum, margins remain resilient, and the balance sheet continues to provide full flexibility to invest for growth and sustain shareholder returns. In terms of the operating context, the operating environment, and it is nice to say this about Nigeria, became more supportive during the period. Inflation eased, interest rates declined, and the naira strengthened. Of course, we had strong FX liquidity and higher external reserves. Economic activity also remained resilient, with GDP growth accelerating to 4.4% in the second quarter, and with telecoms continuing to make an important contribution to the economy.
Karl Toriola: While the operating environment will remain dynamic, particularly in relation to the energy cost of cost rates of our moves, pricing behavior, and customer affordability, the improved macro backdrop supported better visibility and stronger execution across the business. In terms of the key financial highlights, Modupe will speak to most of this slide gives you the nine-month picture in one piece. We delivered strong operating results across growth, earnings, and cash generation. Growth was broad-based, which reflects the resilience of our core business and the strength of the underlying demand of our services, which continues to grow. Data, as usual, was the main contributor, with home broadband becoming gradually an increasingly important driver within data, supported by our voice growth and digital services. That growth converted into stronger earnings and cash flow. Profit after tax grew 55.3% to NGN 1.2 trillion, rounded up.
Karl Toriola: With the profit after tax margin, I would like to emphasize this, our profit after tax margin is 25.3%, and free cash flow generation grew 57.7% to NGN 1.2 trillion, even as we stepped up network investments and paid dividends. Modupe, as I said, will unlock this in more detail. Turning to service revenue, where many of you had focused on the 13.2% growth in the second quarter, this slide addresses those questions from the previous call directly. The growth expanded in the third quarter and accelerated month by month, with September being the strongest month. Two things explained Q2, and we tried to communicate that, but we will reemphasize it here.
Karl Toriola: The comparison base was higher due to the 2025 tariff adjustment, which we took almost all the tariff adjustments in Q2, in the first instance, and the airtime and data credit was suspended between April and June. That is why the two-year view is the best way to read the trajectory. It looks through the entire base of revenue and shows that service revenue compounding at approximately 40% a year. So nine-month service revenue is almost double what it was two years ago. Growth is increasingly volume-led, driven by more subscribers, deeper adoption, and higher usage. Moving on, Q3 clearly shows what is driving the business, resilient customer demand. As I stated earlier, service revenue returned to sequential growth, rising 8.4% in Q3 versus Q2.
Karl Toriola: Growth was broad-based across data, voice, and digital, which together represent our core business, with data the main contributor as always. Data was up 12.1% on Q2 and delivered more than 80% of the sequential increase in service revenue. In the quarter, it made up about 61% of revenue. Voice also grew 9.3% in Q3, supported by subscriber growth and targeted propositions, even as we are shifting from traditional voice to circuit switch to OTT voice. Together, this shows the depth of demand across customer base, and the next slide shows the metrics behind it. Our connectivity continues to show strong momentum, underpinned by user base growth, rising smartphone adoption, and higher data usage. We added 2.5 million subscribers in Q3, bringing our base on RGS90 basis to 94.7 million.
Karl Toriola: Our active data users are growing faster than the RGS90 base, and smartphone penetration continues to rise with about a third of customers still to move onto a smartphone. Each data user is also doing more. Monthly usage by active subscriber averaged 15.3 GB over the nine months and reached 17.2 GB in Q3, representing an increase of 12% on Q2. Sorry, reached 17.2 GB in Q3, representing an increase of 12.7% in Q2. Revenue per customer is also rising while we keep adding customers, which is reflected in a stronger blended ARPU. Voice remains resilient and cash-generative as subscriber growth and targeted propositions are more than offset the lower minutes per subscriber as usage shifts to data. We continue to invest in coverage, capacity, and quality to support demand and improve customer experience.
Karl Toriola: In terms of our fintech, it shows strong underlying progress that the nine-month headline does not reflect yet. The core mobile money business is scaling, and the airtime and data credit service is recovering. Core fintech revenue, which excludes airtime and data credit commission, more than doubled, driven mainly by higher floating income, as well as balances more than quadrupled since December. In August, our MoMo PSB business moved to its new Alipay+ platform. It is built for reliability, flexibility, and scale, and it is the foundation of a scaled digital financial services platform. Monthly active users are now measured on the new platform only, i.e., we are only counting our monthly active users as subscribers which are on the new Alipay+ platform, and are still growing as legacy wallets migrate and new customers are onboarded. Q3 transaction volumes rose 69% on Q2, reflecting robust underlying engagement.
Karl Toriola: The nine-month headline fintech revenue was lower because of the airtime and data credit service suspension between April and June. It resumed under a new multi-partner model with revenue up 78.5% on Q2. Our priority is to sustain that recovery to expected levels by the end of November and continue building from there. The structural separation of the fintech business is progressing and is subject to regulatory approvals, which we are pursuing. With that, I will hand over to Modupe to take us through the financial overview. Thank you.
Modupe Kadri: Yeah, thank you, Karl, and good afternoon to everybody. Thanks for joining us. I will now take you through the financial performance, cash generation, and capital structure for the period. As Karl highlighted, revenue growth remains strong and continues to outpace cost growth by a wide margin. This reflects disciplined cost management and the continued delivery of our expense efficiency program, supported by a stronger naira and VAT input claims under the new tax laws, which took effect in January this year. Under the new tax laws, all input VAT we paid is offset against the output VAT we collected, and we recovered about NGN 116 billion in cash in the 9 months. Under the previous law, that CAPEX was capitalized into the cost of assets. Now, the operating portion of laws are OPEX, and the CAPEX portion are the cost of the assets we build.
Modupe Kadri: In terms of EBITDA, it grew by 36.8% in the 9 months, and the EBITDA margin expanded by 5.5 percentage points to 56.9%, which is within our guidance. Just for our reference, the Q3 itself reached 58.7%. Energy costs remain an important consideration. Diesel pricing under our power costs contracts, our power contracts follow the lagged mechanism which I have explained previously. In other words, the diesel prices for the subsequent quarter is based on the average of the previous quarter. So that lag helps in cushioning the impact. So it gives us good visibility of the Q4 cost, which we know, and supports our confidence in our full-year margin outlook as we enter the final quarter of the year.
Modupe Kadri: We also stepped up our network investments, with CAPEX excluding leases up 14.2% to NGN 864.8 billion, and the CAPEX intensity of 18.7% in line with our target range. We are investing in new sites, capacity, and home broadband. It gives our customers better coverage and a more reliable experience as data demand grows. In terms of free cash flow, which Karl highlighted earlier, grew by 57.5% to NGN 1.2 trillion, with the Q3 alone contributing NGN 457 billion, or 39% of the 9-month total. Our higher earnings and disciplined capital allocation deliver this growth. Overall, the performance demonstrates our ability to convert top-line growth into earnings and cash, while continuing to invest for future growth. In terms of our capital structure, our balance sheet remains a source of strength and resilience, and provides significant financial flexibility.
Modupe Kadri: Total borrowings are down 36.8% since December to NGN 303.3 billion, and the effective borrowing rate has come down to 16.1% from 17.5%. Interest earned exceeded interest costs on borrowing in the period, which gives us a net interest income position, the first time in recent years. All borrowings are naira-denominated, so there was zero forex exposure in terms of debt. The borrowings itself are at fixed rates, and fixed 10 or 2, long-term by 10 or 7 to 10 years, bonds that we took some years back. So we closed September with a net cash position of NGN 47.7 billion, compared with NGN 104.8 billion in December, after paying approximately NGN 261 billion in dividends, which covered the full-year dividends of 2025 and the interim dividend of NGN 26 for February 2026. We also increased our network investments.
Modupe Kadri: We de-risked our funding profile, which reduced our market risk and gives us the flexibility to continue investing for growth, manage volatility, and sustain shareholder returns. In terms of our guidance, I would hand it back to Karl to talk about that.
Karl Toriola: Thank you very much, Modupe. Let me conclude our medium-term framework and Q4 priorities. Our medium-term framework remains unchanged, and our 9-month performance shows that we are delivering within it. Over the medium term, we remain focused on average service revenue growth of at least low 20% and an EBITDA margin in the mid to high 50% range. CAPEX intensity remains stable in line with our target range of high teens as we invest in network capacity and quality. One important point of context on our margin guidance, it assumed an exchange rate of NGN 1,400 to NGN 1,700 per dollar and mid-teens inflation. Diesel prices, however, have risen materially since our guidance was set, and the stronger naira together with VAT input claims and our efficiency program have helped absorb those increased costs of diesel. Energy costs, however, continue to remain an important consideration, and we will continue to monitor them.
Karl Toriola: Recent energy cost trends, together with the continued delivery of our expense efficiency program, give us increased confidence in our margin outlook. In terms of Q4 priorities, our focus in Q4 is to sustain growth and protect margins so that earnings growth converts into stronger cash flow and long-term shareholder value. For growth, we will keep building our subscriber and usage growth, and we will continue to deepen data adoption and scale our home broadband, digital, and enterprise services. In terms of fintech, we will complete the migration to the MoMo platform, deepen our wallet use, and sustain the airtime and data credit recovery. For margins, we will stay focused on the continued delivery of our expense efficiency program and monitor energy costs, inflation, FX pricing, and affordability. In terms of capital allocation, we will invest in network coverage and capacity, keeping a resilient balance sheet, and we will deliver sustainable shareholder returns.
Karl Toriola: With that, I would like to hand you back to Modupe to take you through what an investment in our 2021 public offer has returned to shareholders. Thank you. Modupe.
Modupe Kadri: Oh, thanks, Karl. To close, based on the feedback we received on the roadshows and the capital market day in South Africa, we would like to show what our performance has meant for shareholders who invested by the 2021 public offer. Some investors asked us how much an investment in Nigeria has returned in real terms, so we have prepared this analysis of an investment in our 2021 public offer. An investment in the MTN IPO at the time has grown in real USD terms, despite the massive naira devaluation and inflation. With dividends reinvested, the investment has grown in USD terms after inflation, despite naira devaluation. Every investment in MTN Nigeria here beats both the Eurobonds and the naira treasury bills, and delivered positive real returns in both naira and US dollars. Naira treasury bills lost real value in both currencies.
Modupe Kadri: Taking the 2022 final dividend as a scrip dividend added the further output because there are some shareholders who did not take the cash option and wanted to reinvest back. The analysis is there for you to, you know, your risk and your spare time. With that, I will hand it back to Chima for the questions and answers.
Chima Nwaokoma: Thank you. Thank you, Karl, Modupe, for the overview. We will now move on to the Q&A. We have 15 hands up, so we will take the questions in twos. Please, let us keep our questions brief and to the point, and avoid repeating questions that have already been addressed. With that, we will start off with Madhvendra, followed by Cesar. Madhvendra, over to you.
[Analyst 1]: Yes, hi. Thanks a lot. Can you hear me okay?
Chima Nwaokoma: Yes, we can hear you.
[Analyst 1]: Thanks. Thanks a lot for taking my questions. I have a few very quick ones. The first one is on your revenue growth trend. Very good to see the acceleration, and that you talked about the exit rate in September. If you could talk about the trends in October as well, and what I mean to ask is that, is the momentum getting better or it has stabilized? The second question is on the core fintech business that is up only 11% quarter-on-quarter. Is that in line with your expectations and plans, or is that something which you think can actually be done better? The final question is on the VAT input contribution during the quarter.
[Analyst 1]: If you could talk about what was the impact on the margins purely from the VAT input credits you got, and is all the input credits now captured or is there more to expect in the future? Thank you.
Chima Nwaokoma: Thank you. Cesar, over to you. Cesar?
[Analyst 2]: Yes, hi. Am I audible?
Chima Nwaokoma: Yes.
[Analyst 2]: Great. Good afternoon. Thanks for the opportunity and congrats on the numbers. So two questions for me. Why are you so cautious on revenue growth? Because it looks like 22% was delivered in September, although you still have a massive headwind from fintech. Let me ask you the question another way. If fintech was running at full steam and if XtraTime advance was running at full steam, wouldn't your revenue growth be closer to maybe 25% or 27% in September, hypothetically? Second question, was there any one-off item in the cost side? I think that there was a small provision reversal, et cetera, but anything else on the cost side? I mean, obviously the EBITDA margin was significantly higher than expectations. Anything to watch on the cost side which was of exceptional nature? Thank you so much.
Chima Nwaokoma: Okay. Karl?
Karl Toriola: Karl, may I?
Chima Nwaokoma: Yeah, go ahead.
Karl Toriola: Okay, first, Madhvendra. Madhvendra, we are not going to comment on trends in October. You have been at this game for way too long to expect otherwise. I will leave Bode to discuss the only 11% quarter-on-quarter. The question was it in line with expectations or can we do better? The VAT input, do we expect more? I will leave Modupe to answer that. For Cesar, why are we so cautious? Your question was, if we had fintech running at full steam, would we be closer to 25%? First things first is that we have gotten quite a bit of momentum in terms of fintech already in Q3. It is going to be better in Q4, but it is not like it is going from 0 to 100 in Q4. Built into that. We are not making a restatement. We do not make restatements.
Karl Toriola: Our guidance is at least low 20%, and we maintain that guidance. The second question was there any one-off cost items? I think perhaps we did do, and I think maybe you said explicitly, the margins were surprising. I will leave Modupe to answer that, but I mean, the strength of the naira and the efficiency program are two big things, but no exceptional one-offs. Okay? Modupe, you want to go first and maybe let Bode wrap up this set of two questions?
Modupe Kadri: Okay. On the VAT input, as we have explained, roughly was NGN 116 billion for the nine months. Overall, that is about 2.2% or 2.3% impact on EBITDA in terms of VAT. In terms of whether there were one-offs, what we have explained is that we are trying to be efficient in terms of looking at our expenses. Maybe perhaps one of the things you may not have anticipated, Cesar, would have been that the impact on diesel. For instance, even though the diesel prices were high in the month, but for the average for Q4, it ended up being less than NGN 1,700. The same thing happens for Q3 at less than NGN 1,800. All these things help improve our margins in addition to our expense efficiency program and our cost optimization, as you know. That is how I view it.
Modupe Kadri: I think it's safe to keep it at that. Bode?
Bode Abifarin: All right, thank you. I will just speak to the point Karl had mentioned in terms of our Alipay+ migration. I think for us, what we have done is really establishing this platform across our wallet and financial proposition. So moving to Alipay+, prior to now, if you wanted to onboard on our platform, it was a closed loop to enter. Now it is open to everyone. We are working with the best in the industry. So when you think about our partners, Ant Financial, Alibaba, Longshine. We have really worked on that foundation that enables all the growth that we want to see. So things around our app, our USSD, our savings, and I think most importantly, like we always say, that payment is partnership.
Bode Abifarin: Using our platform and being that infrastructure, you will be seeing a lot more in terms of partnership aligned to where you find Nigerian customers paying for things around transport, delivery. We are working on a lot of partnership. If you looked at this past Dangote shares that happened, we also had a mini app on the platform, giving our customers access to all of these things. So, I think for us, it is really enhancing everything we have in terms of the team, our technology, our systems, our processes, our security, AML. That is the foundation that we have set. Also, we are aligning our merchants and our agents proposition. It is this foundation that we are embedding, and we are pretty much very excited about the journey in terms of how we continue to move forward. Thank you.
Chima Nwaokoma: Thank you. We will move on to Modi and Jonathan. Modi, over to you.
[Analyst 3]: Hi. Hope I am audible. Thank you for the opportunity, and Karl, congratulations on your 20th anniversary at MTN Nigeria. Just two quick follow-ups from my side and one question on wallets. For follow-ups, basically on service revenue growth, you mentioned last quarter that it was tougher comps which was kind of impacting your growth rate. Now, there is such bit of a step down in tougher comps from Q2, Q3 last year. But your further step down in your comps get much more easier for the Q4. So it is kind of banned, the kind of improvement that you have seen in terms of comps getting easier. Do you see the similar kind of improvement given on the back of tougher comps that you spoke on last quarter? Hope I am clear. Second question is on the margin exit, 58.7.
[Analyst 3]: You mentioned, just confirming, if diesel prices get lower from here, or if you see any movement, better movement in oil prices, do you expect further margin improvement? Or there is a kind of seasonality here, and you continue to expect your mid-50s kind of margin evolution? Third question is basically on the wallets. I understand you have moved switch to the new wallet, new platform, but in aggregate, did you add any wallets in the quarter, or just kind of, do you still have a lot more on legacy platform?
Chima Nwaokoma: Okay, thank you. Jonathan.
[Analyst 4]: Good afternoon. Thanks for the opportunity to ask questions. Just two from me on, given your very rapid growth in terms of data volume and traffic, how should we think about CAPEX intensity over the next 6 to 12 months, and do you have sufficient network capacity and headroom to match this kind of demand growth? I presume you are offloading some of this traffic into the fiber network. If you could give us a sense of where you are investing more heavily in the network, whether it is RAN and FTTH, some color would be appreciated. Then obviously, your free cash flow generation has meant your balance sheet is now in a net cash position. I know you are limited in terms of dividend payouts by the retained income balance on your balance sheet.
[Analyst 4]: Would you consider paying out all of the retained income balance, given how under-geared the balance sheet is?
Chima Nwaokoma: Okay, thanks. Karl, over to you.
Karl Toriola: Okay. There is a bunch of questions. First of all, thank you, Modi, for the anniversary congratulations. That became public compulsory for me. I think I will just speak maybe to the margin exit Q3, and then Modupe speaks to I will speak a little bit to the CapEx, and Modupe speaks to the balance sheet dividend payout, which Jonathan seems to like the idea of, and then let Modi speak to the questions on mobile from Modi. Look, our exit on Q3 was 15.7%. There are three, four things that really, really drives this. Part of it is VAT input. I think that has been discussed by Modupe. The second one is diesel prices, and our diesel price is at the ex-depot price. It is set for the quarter at the ex-depot price of the last day of the previous quarter.
Karl Toriola: For Q3, it was set on 30 June. For Q4, it was set on 30 September. You are asking me to forecast what is going to happen to diesel prices in the future. Very hard to do that with current leadership in the US, but I think you can see clearly the sensitivity to diesel prices. The other two things that affect our OpEx level that is outside of our control is foreign exchange, which has been a tailwind, and our internal expense efficiency program, which has been very effective. Sometimes we do not really talk much about gross margins, but we have seen significant gross margin expansions over the last few years. So that is a very strong output. Jonathan, your question, CapEx intensity, we maintain our guidance as it is. Do we have headroom? In some locations, we do. In some locations, we do not.
Karl Toriola: I think the most significant part of our CAPEX is still going to be taken up by radio, but radio also includes the backhaul, which is transmission backhaul, which could be by fiber to the sites or microwave. But we have ramped up investment in our FTTH, and we will continue to do so. We are very happy with how that business is going. Yes, it does offload some traffic from the mobile network, but you need to get to a certain scale before you start to see materiality in that. But our FTTH connections do anything from 400 gigabits a month to 1 terabyte a month. So, huge opportunities there for offloading. But no, look, we always have a little bit of congestion here and there, and it is always something that we are addressing on an ongoing basis. How do we address it?
Karl Toriola: The first option, the cheapest option, is always spectrum acquisition, so that is always something that we look at, but we have done a lot of those in the last few years or so. The second one, we try to push as much traffic onto 5G as much as possible, and then, of course, we spend money on investing on our 4G network expansion, and spectrum refarming as well, away from 2G to 3G. So, that is how we focus on it. I hope I have answered the question. The balance sheet for some dividends are linked to Modupe. Yeah, I think that is a question for Modupe, and then Bode can wrap it up on no more questions. Thank you.
Modupe Kadri: Okay, let me circle back to one of Bode's earlier questions, where he said, "Do we expect further improvement in diesel prices?" Do we expect further movement, improvement in our margins with diesel prices not stable? Well, look, the easiest way to look at it is that, for diesel prices for Q3 and Q4 are about the same levels, so which is going to be baked into the accounts. So, I can tell you that, for instance, the average diesel cost for the full year now is going to be sub-NGN 1,400 based on the Q4 prices. And we can also see that energy costs for the first nine months, on average, is less than 40%, and that rose in Q3, rose to over 50% in the impact. So, that tells you that with diesel prices being higher, it has an impact on the margins.
Modupe Kadri: But what is clear is that, at least, the diesel story for FY26 is done because we know our diesel prices and stuff like that is explained. Now, in terms of Jonah's question, well, the policy, the dividend policy is clear, minimum of 80% of your retained earnings. So, the board has to apply its mind as to whether it wants to go higher than that, as to whether to pay 100% or 90%. But bear in mind that we also have to look at the volatility in the market first, make sure that you have enough earnings to cover such volatilities anyway. So, but at least for now, the commitment is 80% of the retained earnings. Bode?
Bode Abifarin: All right, thanks. I think the question on, as opposed to the migration, how many new customers are we adding? I think one of the interesting things about our new platform is, since we cut over in August, coming into October, if we are signing up, if we have 10, for as an example, 10 new customers on the platform, seven out of those 10 are new customers. I think a lot of the things that we are now doing in terms of the onboarding, the platform itself, the intuitiveness, and we are just starting coming out of hypercare, but overall, just 75% jump in activation overall. Thank you.
Chima Nwaokoma: Okay, thank you. Next is Jonah and Samuel.
Modupe Kadri: Chima, I think we need to just look. We have so many hands up, and we need to give everybody an opportunity to ask questions. We will appeal to the next questioners to rather than repeat the questions, to allow other colleagues the opportunity to ask their own questions. Thank you.
Chima Nwaokoma: Sure. Thanks. Okay, Jonah, over to you.
[Analyst 5]: Good afternoon. Thanks for the call, and congrats on a strong quarter. I will limit mine to just two. Firstly, can you just tell us what the penetration level of airtime and data credit was in Q3 or at the end of Q3 compared to the pre-suspension levels, and if there has been any teething issues or integration issues with the three additional airtime credit providers? The second question, I wonder if it is possible for you to split out what the impact was from the higher diesel costs and then the VAT input, and the FX and cost efficiencies separately on looking at the margins on a quarter-on-quarter basis. Q3 versus Q2 margins, that uplift, if you can kind of split those different factors out, that would be great. Thank you very much.
Chima Nwaokoma: Okay, thanks, Jonah. Samuel?
Samuel Gbadebo: Good afternoon, everyone. Congratulations to the team for the result and your 25th anniversary. First question is on debt. I know Mr. Modupe has repeatedly said there is no guidance for what borrowings could look like. My question is, since we have seen over 30% reduction in debt, are we fair or correct to assume that it is possible you are going to be carrying zero borrowings in 2027 or maybe even this year? We just know that your key liability will stem from lease liabilities itself. That is the first thing I am trying to get a sense on. The second one is, we saw some bit of improvement in effective tax rates relative to Q2 that came in at 35%, relative to 35.4% that we did in Q2 2026. Just want to know what exactly you are doing that is bringing about that relief to effective tax rates.
Samuel Gbadebo: One last one, if you allow me to squeeze that in. The net finance costs recorded improvements, and on the debt front, positive for finance costs, but also the finance income showed material upliftment, and we saw that stemming from your placements with banks. Just want to know if this is a new trend, or it is just a one-off, or something that we shouldn't pay too much attention to? Thank you.
Chima Nwaokoma: Okay. Thanks. Karl, Modupe, back to you.
Karl Toriola: Okay. Let Ayom answer question number one. Penetration levels of XtraTime in Q3 versus pre-suspension and any integration issues with this vendor. The other questions are for Modupe, so I will allow him to go through them. Thank you.
Ayham Moussa: Yeah. Okay. Thanks, Karl. On the penetration level, before the suspension, the general industry level was around 20%. Today, I will need to get back to you with the exact number, but it is something between 12 and 15, something like that. I advise that you do not use it as anchor to Q4 revenue, voice data, because people change their behavior. Some of them, they stop borrowing, some people come new. That is it. On the integrations, everything is up and operational now. Basically, you have three vendors. They are operational, licensed, plus Optasia as well. Also, we have four. All of them are operational, all the channels, whether buying bundles, CVM, or when you do via Facebook purchase or Instagram, they are all live and operational. Thank you.
Modupe Kadri: Okay. The other questions, how to do. Generally, it is not possible to split the uplift as you requested. It is too intertwined, and they are all interrelated, so you cannot really strip it out. Like I have said, as I talked to you, energy cost has gone up to about 50% of our CAPEX in Q3 alone, whereas the average for the year was about less than 40%. In terms of forex impact and all those things, I guess you have to come up with a model and somehow to figure that out in your models. We are assuming, we currently are assuming there is no debt. At least the nine months result says that there is no debt then. I think that is what it is for now. Let us go back to why would you take debt? You take debt when you have some things to finance.
Modupe Kadri: And of course, if there is a business case to do that, then you need to take debt. The board has approved different share programs, which will be communicated to the market at the appropriate time. But having a share program does not mean you are going to tap on it, except when you have a need to do so. On the EBITDA, yes, there was, I guess, the impact of the RITC, as you know. MTN is doing the public share expression, and we got some tax credits for that. Of course, don't forget the way the RITC scheme works. Because of the MPR plus 2 uplift you have on your spending, you get that as an additional uplift, which reduces your effective tax. How about your net finance cost?
Modupe Kadri: Well, the reality is that the bonds we have at rates less than 14%, and the highest is about 14%, 14.7, probably, from the 7 and 10-year bonds. So where you have that cost base and your MPR is above the 2, it means that whatever excess funds that we have on our balance sheet and we have placed there, they are generally going to have a greater return. So, to the extent that we are not taking additional borrowing at this time, I assume that is going to be the trend. Of course, we are already locked in at those finance costs for our bonds. Thanks. Next slide.
Chima Nwaokoma: Okay. Thanks. We will move on to Ebuka and Lynette.
Karl Toriola: Let me ask, let us just take all questions at once, okay? Because of time limitations.
Chima Nwaokoma: Yeah. Ebuka, please go ahead.
Karl Toriola: Ebuka.
Chima Nwaokoma: Ebuka, it's your turn. Okay, let's have Lynette.
[Analyst 6]: Can you hear me?
Chima Nwaokoma: Yeah, we can. Go ahead.
[Analyst 6]: Okay. I'm sorry, I was speaking. I didn't know I was muted. First of all, congratulations on your 25th anniversary. I have just two questions. The first one is that, we noticed that three cost items actually fell.
Karl Toriola: Ebuka, your audio is freezing. I can't hear you.
[Analyst 6]: Can you hear me now?
Karl Toriola: It's better now.
[Analyst 6]: I was saying that we noticed three cost items actually fell in your 9 months results. The interconnect cost was down like 4%, transmission cost 23%. If you look at the yearly trends, you will see upward trends year-on-year. That is unusual because your subscribers grew by 11% and your data traffic was up by about 30% in the same period. Normally, this cost should go up, not down. Can you help us understand what is happening in each of these line items, and how should we think about this? Is this a new normal going forward, or do we expect them to go back up as volumes keep growing? That is the first question. The second question I have is that, you launched FlyX ODU in September, which is like a fixed wireless broadband.
[Analyst 6]: If you look at Airtel already had a similar product on the market, which was also scaling. I am not sure MTN had one ODU product till September this year. Was that a competitive response to Airtel? Secondly, is FlyX going after the same customer as FTTH or a different one? What I mean by this is it just a different route to the same customer?
Chima Nwaokoma: Okay, next.
Linet Muriungi: Thank you all, and congratulations on the fantastic performance. I mean, excellent set of results. Two questions, please. The first is in relation to the PSB legacy wallets versus those on the Alipay platform. Is it possible to give a high-level geo split, that is the percentage of wallets registered and active in the metropolitan regions versus the rural or peri-urban wallets, plus the growth patterns and possibly transactional volume and value drivers? The second question is, please guide on what the regulation is regarding PSB treatment of interest earned from wallet float, whether this varies from PSP syntax, and how MTN treats and recognizes the interest income. Thank you.
Chima Nwaokoma: Thank you. We move on to Biwe.
[Analyst 7]: Good afternoon, and congratulations on a strong result. My questions just center around the volume growth point. Where are these additional net adds coming from, and how are these customers monetizing? Are you gaining these customers through heavy promotions? What are the characteristics around the ARPU and churn of these new cohorts? Then the second one, just around the XtraTime normalization. How much more is left for the service to be fully recovered, and who is doing the heavy lifting between the new vendors and Optasia, and how are repayment rates looking like for XtraTime? Thanks. I will leave it there.
Chima Nwaokoma: Okay. Karl, take this first, then.
Modupe Kadri: I will take 4. 4724.
Chima Nwaokoma: Okay, Nadine.
Modupe Kadri: For the rest of time, we have to move fast.
[Analyst 8]: Okay. Good afternoon, Karl and team. Congrats on the strong volume-led growth. Just two quick questions from my side on costs. Firstly, just wondering if Modupe could help reconcile the credits on the sponsorship for youth events, for sporting events and youth engagement. I think it was a NGN 20 billion credit. I just want to understand the shape of that from Q1 to Q3. Secondly, just if you could give us some color on the NGN 2.2 billion litigation provision in this quarter's result. Thank you.
Karl Toriola: Okay. I am going to answer some of the questions and hand over the rest. The question of FlyX ODU to Ayom, PSB wallets, et cetera, to Bode. Ayom, for you, this question from Biwe, was it volume-led growth? Where are the net adds coming from? Are we monetizing? Are we using promos? I will also hand to you. Nadine's questions are for Modupe. Let me answer on the XtraTime. We will not give details on the relative performance of our vendors. We have said we expect to return back to normal levels in Q4, and we will leave it at that. Ayom, maybe Okay, and sorry, on the three cost items from Ebuka, interconnect costs down 4%.
Karl Toriola: Please remember that even as we are growing data aggressively, voice ultimately is going to continue to decline relatively because people are moving from voice to data, and there are some interconnect costs, including international outgoing, et cetera, that is going to reduce there. Transmission cost is primarily around the strengthening of the naira, so interconnect links and data, and contracted in USD are going to become cheaper in naira, as the naira strengthens versus the dollar. I think those are the two drivers of why you see some of those interconnect and transmissions costs going down. Ayom, ODU, and where the net adds are coming from, how we are monetizing, are we using promos?
Ayham Moussa: Yeah. Okay. Look, the ODU is simple. In our ambitions for the home, which Karl talked about always, every quarter, there is, have been always a mix of fiber and FWA. It has never been 100% fiber. Basically, that campaign is to continue alignment with our ambitions, right? There is certain ambitions in terms of number of fiber and WDA. Where we do them, definitely we do not do them in an area where we believe it is a fiber area, and every area has its own characteristics. Fiber works in heavy traffic area, urban areas, WDA work in different kind of areas. That is how it is ongoing. There is no conflict between both objectives. They go together to achieve the final end game. In terms of the volume growth and net adds, it is all over the market. I cannot attribute it to certain geography.
Ayham Moussa: They are all over the market. They are coming from new acquisitions, plus from returnees and the proper churn management. There is no one single promo that can achieve that. The churn we see is satisfactory. We do not see any alarm about them or anything unusual. They are like all our mates in terms of their marginal report and their churn. This is about it. I think I will answer the XtraTime, so that is fine. Thank you.
Karl Toriola: Bode, just to refresh, there are some questions for you on legacy wallets, such as OmniPay. Are they coming from urban or rural? What is the split? What is the regulation on interest on wallet floats for PSB versus PSP, I think?
Bode Abifarin: Okay. All right. On the legacy wallets, I think one of the things that we did in August, that was the end of August when we were doing the migration, the approach we took was a user-driven migration. By the end of next week, we are moving all the customers that have not migrated to Alipay+, we are going to move them. There are a number of things that we have been doing with our partners. I think in the next 2 weeks, we will not have the legacy wallets anymore, and there are a lot of plans we have on ground as we make that move in terms of the migration. In the earlier question, I talked about the rate of activation that we are having, new customers versus legacy, which is about 75%.
Bode Abifarin: Now, in terms of the splits, based on our current data, and of course, the mandate from the Central Bank of Nigeria, if you look at a lot of the customers we have, we have a split across the north, the west, just equal splits across, right, or more heavily around the southwest and north as well. Now, because we are also changing proposition, and we are changing also the way we are onboarding and some of the innovative products we are also taking to market, we are also seeing that shift because if you come to our platform, you can make your transfers, you can pay a bill, you can use any of the services through our partners on our platform. We are also seeing that mix change, but we are also very aware of just the huge amount of opportunity that we have seen, and we are following that trail across.
Bode Abifarin: Now, in terms of the, for PSBs, on the transactions, we take a revenue on our transaction fees. I think the float you referred to, the interest on the floats and deposits, which are clearly separated. Thank you.
Chima Nwaokoma: Okay, thanks.
Modupe Kadri: On my end, I have some questions. Let me ask some of these questions. On the provision of the traffic data, most of them are directly the marketing costs. As for the litigation costs and legal costs, the board will agree that we should almost settle some of these cases rather than avoiding endless litigation. You are going to see that going on to the future, at least just to reduce the legal exposure and everything. Okay, so now. Maybe just let us stick to one question each and just take the last six, and we have to close out this call by 4:00PM.
Chima Nwaokoma: Okay, thanks. This noted. Tajudeen.
Tajudeen Ibrahim: Yes, thank you. Good afternoon, and congratulations on your very solid numbers, and congrats on the 25th anniversary. Most of the questions I would have loved to ask have been asked, but there is one that I believe it will be useful if you can speak to. We see data being very solid in a segment of your business. Data is almost 2 times your voice revenue. I reckon that by next year, most likely, data can comfortably be about 2 times your voice. What would you consider as the major risk factors that can slow down the growth momentum of data, and how do you plan to address those risks so that they do not materialize? The second one, sorry for that, is on Mafab.
Chima Nwaokoma: Tajudeen, please, let us expect that there are 6 minutes.
Tajudeen Ibrahim: Okay, thank you.
Karl Toriola: Please, the next speaker, all protocols observed, we have taken your congratulations on 25th anniversary and congratulations on results. Just a question only. Okay? Straight to the question.
[Analyst 9]: Okay. Thank you very much. My question is seeking an update on 5G. If you could just give us an update on the percentage of traffic that is now sitting on the 5G network, progress on population coverage, and the number of your 5G smartphones on the network. Thanks.
Chima Nwaokoma: Thanks, Odayar.
[Analyst 10]: My question is, what was the reason for the software maintenance cost drop, and can you give us an outlook for that cost going forward, Modupe? Thanks.
Chima Nwaokoma: Okay, Sisilele.
[Analyst 11]: My one is simple. Can you comment on competitive dynamics that is in the industry? My sense was that perhaps you lost some market share in Q2, and how much of that has been recovered to date?
Chima Nwaokoma: Thanks, Myuran.
[Analyst 12]: Thank you. My question is all on MoMo. What percentage is still USSD bearer? Secondly, on the MoMo app, when are you getting your microfinance license because OPay is eating this market there? Thank you.
Chima Nwaokoma: Finally, Usman.
[Analyst 13]: Thanks. With Starlink direct-to-cell moving toward commercial launch to mobile smartphones, I would like to know what your internal assessment of the risk to your data market share is, and how MTN will prevent subscribers from migrating, especially in areas with coverage issues? Thank you.
Chima Nwaokoma: Okay. Karl, maybe, while the presenters answer or they ask questions, let's go for this ethics.
Karl Toriola: Of course.
Chima Nwaokoma: The university can build.
Karl Toriola: One, strengthening of the naira, answered. Let me cut through a few issues and then hand over to Taju. What are the risks to our continued growth in data consumption and enhanced affordability for people who just get into the market? Devaluation risks, which we do not see as significant at this point in time with the very excellent management of the Central Bank of Nigeria, could hamper some of our growth. If we are not present in taking the offloading from wireless to home broadband solutions, it could be a potential risk. As you guys have seen, we have gone from number 9 to number 1 on the FTTH market, number 1 by a long margin, so we have mitigated that risk.
Karl Toriola: On the wireless home broadband solutions, we are very, very much present, and in spite of the noise around ODU is just an antenna extension on an existing 5G solution, which we have been benefiting forever and a day. Tracy, our population coverage on 5G remains around 20%, and total percentage of traffic is somewhere in the range of 13%, 14% and growing, but that is total. In sites where there is co-located 5G with 4G, i.e., where you have 5G coverage, it is in the range of 30%, 39% of our traffic is on 5G, and that is growing as well. It is the highest sites that generate the highest amount of 5G traffic, 70% of the traffic on those sites are on 5G. I hope that answered the question.
Karl Toriola: After I discuss market share loss, I would Before that, Usman, with Starlink direct-to-cell, what is the internal assessment of the data market share? Look, we are very awake to Starlink and Elon Musk threat, but it is still a very long way from being a significantly competitive solution. The solutions that are provided by Starlink, and we have one or two places where it is live DTC, very, very low bandwidth solution. So it is not about to take over our urban market share. If you have a house in the village in the north and you want your kids to be able to watch Netflix and play their games, yeah, Starlink is very useful as a home broadband solution. But in the urban centers, we are very much present with 5G and FTTH, and direct-to-cell is a long way off for posing a significant threat.
Karl Toriola: It does not mean we are ignoring it, but the kind of quality that you get out of that is a long way from anyone on this call, which accounts for 70% to 80% of our revenue, to bother using it. Then we can talk about the fact that that is going to be a dollar denominated expensive solution, and, and. Ayom, the question was with market share loss from Was it Sidiwe? With the market share loss in Q2, have we recovered? What is the outlook for that? Do you want to take that, and then Bode can take the questions on the split of USSD, and when are we getting microfinance license? Thank you.
Ayham Moussa: Thanks, Karl. Yes, market share, there is an important portion of the market share loss we see in Q2 have been recovered, and I can see it basically in the revenue. As we said, the Q2 was majorly impacted by those who were borrowing money. So that is okay for now. Thank you. I think, Karl, that is the only question, right? Market share only.
Karl Toriola: Yeah.
Ayham Moussa: Yeah. You covered that.
Karl Toriola: Thank you.
Ayham Moussa: Thanks.
Karl Toriola: Then, Bode, USSD versus app split, and when are we getting our lending license? Those are the questions, I think, for you.
Bode Abifarin: All right. On the USSD, I think prior to the migration and some of the foundation that we have set, I will say USSD versus app was almost 90%. We have seen that go to just about The split is now about 65/35. We are seeing more people adopt the app. I think, interestingly, because of some of the drives we are having from our rural channels, it is interesting to see that a lot of the customers actually have phones that they can actually use to download our app, similar to some of the competitors that you mentioned. Now, in terms of the microfinance license, you mentioned OPay, definitely. I think even as we see transaction fees continue to go down in the ecosystem, definitely value-added services becomes a must for anybody that wants to win in this market.
Bode Abifarin: Those are surely a lot of the strategies that we are also pursuing in terms of licensing. Thank you.
Karl Toriola: Okay. We have come to the end of the call with 1 minute time overrun. Thank you very much for your time here. Just like to emphasize, there was a lot of, I think, turbulence in the perception of the results in Q2, and we kept saying it is a base effect 2025. I think we have shown clearly and demonstratively that that is the reality, as the base effects wash out, and there was probably still a bit of a headwind in Q3. You will see the growth, relative growth rates, going back to normalization. Second thing, there was a lot of question marks about XtraTime. We will be back to our normal levels in Q4, so that is also another exceptional situation. We have always said that, look, our revenue was not dependent on XtraTime.
Karl Toriola: Yes, it does have a 2% to 3% impact on the top line, but the customers very quickly find alternative channels, and we have seen that happen, but we are giving them the convenience of the return of the lending services. Thank you for your kind wishes on the 25th anniversary. We are very proud to be part of an institution that we are building to last, and proud of our impact to Nigeria as a whole, and to you shareholders, for the precious dividend that you return to us. We look forward to seeing some of you over the course of the next week or 2, and hope you have a nice autumn/winter for those that are in cold climes, and summer for the people in South Africa and Nigeria. It is what it is. Thank you, guys.
Bode Abifarin: All right. Thank you.
Chima Nwaokoma: Thank you.
Ayham Moussa: Thank you.
