MTN Nigeria Records ₦514.9 Billion Loss Over Naira Devaluation

MTN Nigeria Communications Plc (MTN Nigeria) has reported a loss after tax amounting to ₦514.9 billion.

This figure was recorded in the company’s financial results for the nine months ending 30 September 2024, reflecting a mixed performance.

The loss recorded contrasted with a profit after tax of ₦4.1 billion in Q3 2024.

When adjusted for the net foreign exchange loss, the Profit After Tax (PAT) stood at ₦118.5 billion, representing a decline of 59.2%.

This loss is primarily attributed to the devaluation of the naira, with the ₦514.9 billion loss reflecting a decrease of ₦4.1 compared to the ₦519.1 billion reported in the half-year results.

In spite of the challenging economic environment, service revenue experienced a notable increase of 33.6%, reaching ₦2.4 trillion.

Additionally, the total number of subscribers fell by 0.9% to 77.0 million, influenced by the NIN-SIM linkage regulations, which led to the deregistration of certain Subscriber Identity Module (SIM) cards by telecom companies.

The report indicated a 5.1% rise in active data users, totalling 45.3 million, while the number of active mobile money (MoMo PSB) wallets decreased by 21.8% to 2.8 million.

Furthermore, the results revealed a 5.3% decline in Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA), which amounted to N860.2 billion, with the EBITDA margin decreasing by 14.9 percentage points to 36.3%.

In his remarks regarding the nine-month results, MTN Nigeria CEO, Karl Toriola, characterized the performance as “resilient,” despite ongoing macroeconomic challenges and regulatory hurdles.

“In the first nine months of 2024, we sustained the growth in our underlying operating performance – underpinned by our resilient business model and operational agility – despite challenging conditions.

“The inflation rate remained elevated amidst rising energy prices and naira depreciation. Inflation averaged 32.8% in the nine months (Q3 2024: 32.8%) compared to an average of 24.5% in 2023 (Q3 2023: 25.5%). To curb inflation, the Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR) by 8.5pp to 27.25% during the period, resulting in higher funding costs, although this helped reduce volatility and improve liquidity in the forex market.

“The higher inflation and interest rates weighed on consumers’ spending power and impacted business activity. However, we remain focused on enhancing operational efficiency and driving the growth of our commercial operations,” Daily Trust quoted the report.

The telecommunication company has also announced its intention to raise ₦50 billion through the latest issuance of commercial paper (CP) as part of its ₦250 billion Commercial Paper Issuance Programme.

This issuance, comprising Series 11 and 12 CP, is designed to enhance MTN Nigeria’s short-term working capital and broaden its financing options, as stated in the communication to the Nigerian Exchange Limited and the investing community.

The proposed issuance aligns with MTN Nigeria’s ongoing strategy to leverage the debt market as a flexible funding mechanism to address immediate financial requirements.

Recently, the depreciation of the naira has adversely affected the telecommunications company’s earnings, which in turn has influenced its capacity to distribute dividends to shareholders.

In the year 2023, MTN Nigeria experienced a substantial increase in net foreign exchange losses, amounting to ₦740.4 billion, reflecting an 805% rise compared to ₦81.8 billion in 2022.

It is noteworthy that in June 2023, the Central Bank of Nigeria (CBN) concluded the multiple exchange rate system and allowed the currency to float, resulting in an increase in the exchange rate from ₦461.1/US$ in December 2022 to ₦907.1/US$ in December 2023.