Today, MTN Nigeria Communications Plc (MTN Nigeria) announces its unaudited results for the half-year ended 30 June 2022.
Unless otherwise stated, financial and non-financial information is year-on-year (YoY, 6M to June 2022 versus 6M to June 2021).
During the first half of 2022, we made good progress in strengthening the resilience of the business in the face of our increasingly challenging operating environment with rising energy, food and general inflation putting pressure on consumer spending. The conflict in Ukraine as well as implementation of a “zero-COVID” policy in China, has also put a strain on global supply chains. To mitigate global supply chain and exchange rate risks, we accelerated capital expenditure for network expansion into the H1 2022.
We deployed capex of N311.6 billion to accelerate the rollout of our 4G network, which now covers 75.3% (compared to 65.1% in H1 2021) of the population and accounts for 77.9% of data traffic (compared to 67.2% in H1 2021).
In addition, having acquired one lot of 100MHz in the 3.5GHz spectrum band from the Nigerian Communications Commission (NCC), we are on track to launch 5G services across the country in Q3 2022. 5G technologies deliver significantly higher speeds and lower latency, potentially unlocking many new use cases for consumers and enterprises while improving network economics.
Since the directive from the NCC for all operators to restrict outgoing calls for subscribers whose SIMs are not associated with NINs, approximately 10 million of those affected have submitted their NIN, of which about 2.6 million have been reactivated following verification by National Identity Management Commission (NIMC). We continue to engage our affected customers and support NIMC in accelerating NIN enrolment in the country.
We maintained strong commercial momentum with a net addition of 5.7 million mobile subscribers in H1. This reflects a pleasing acceleration in the run-rate of monthly net additions during Q2, following the initial impact of the restriction of outgoing calls placed on subscribers who had not submitted their National Identity Number (NIN) as at 4 April 2022. Our aggressive drive for gross connections supported this recovery as we ramped up SIM registration and NIN enrolment capacity.
We added 2.5 million active data subscribers in H1 as we continued to drive data conversion from the new and existing subscriber base. In addition, we continue to enhance the quality and coverage of our network to accommodate the increasing demand for data.
We achieved some important strategic milestones in H1 towards delivering our Ambition 2025 strategy. This includes the final approval for our MoMo Payment Service Bank (PSB) and the commencement of commercial operations on 19 May 2022, leveraging the solid foundation of our existing MoMo business.
We are pleased with the progress since the launch and excited about the prospects of our fintech business and driving financial inclusion in the country. As at the end of June 2022, we recorded 4.2 million registered MoMo wallets of which 2.4 million are active, generating MoMo transaction volume of approximately 7 million within six weeks of operations.
Our financial performance during the period was underpinned by strong commercial momentum, driving broad-based growth across our key revenue lines such as data, fintech and digital services. However, growth developed at a slower rate in Q2 2022 mainly due to the restrictions arising from the new NIN-SIM directive, which came into effect on 4 April 2022. Consequently, service revenue grew by 19.9%, broadly in line with our medium-term growth guidance of ‘at least 20%’.
Our ability to maintain service revenue growth while managing costs led to a 22.1% growth in EBITDA and a 0.9pp YoY expansion in EBITDA margin to 53.6%. This was achieved despite upward pressure on our operating expenses driven by higher lease rental costs, the acceleration in our site rollout and rising energy costs. The escalation of diesel prices in Nigeria impacted our EBITDA margin by about 0.3pp in H1. The robust EBITDA performance is a testament to the disciplined execution of our expense efficiency programme, which also underpinned our PAT growth of 28.1%.
Free cash flow was down by 14.3% due mainly to the accelerated capex, which was up 67.1%. In the second half, we expect capex to abate, which should benefit free cash flow in the remainder of the year. Our funding and liquidity are well managed, with net debt to EBITDA at 0.6 times. We will continue to invest in the resilience of our business and take advantage of growth opportunities while unlocking new revenue streams.
In line with our dividend policy, our Board of Directors has approved an interim dividend of N5.60 kobo per share to be paid out of distributable net income. This represents a growth of 23.1% over the N4.55 kobo per share paid in H1 2021. As part of our work to build sustainable societies, we have made good progress on our rural telephony journey. During H1 2022, we added 370 rural sites, bringing the total to 1,553. We remain committed to driving increased telecommunications access to the unconnected.
MTN Nigeria Foundation continued its programs, training over 900 youths across six states in the 2022 edition of the ICT and business skills training, of which 200 people received equipment grants totalling N40 million. In addition, the Foundation completed and handed over fully furnished ICT Labs in 27 public secondary schools in 23 States, installed solar-powered boreholes in 16 states, and upgraded seven primary health care centres across the country.
Finally, we will continue executing our strategy to deliver service revenue growth in line with medium-term guidance. As we manage the increased pressures in the macroeconomy 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.