On March 1, MTN Group, Africa’s largest telecoms operator, announced a significant decline in its full-year profit, with a potential drop of up to 80%. The major contributing factor was the sharp devaluation of the Nigerian naira, impacting its largest unit, MTN Nigeria, which reported a loss.
Headquartered in South Africa, MTN stated that its headline earnings per share, a key profit metric, is expected to fall between 60% and 80% for the year ending December 31, compared to 1,154 cents the previous year.
The devaluation of the Nigerian naira, influenced by new forex rules adopted by Nigeria’s central bank in June, played a pivotal role. MTN reported an approximately 96.7% devaluation, bringing the exchange rate to 907.1 naira per dollar by the end of December. This devaluation resulted in higher operating and net finance costs, along with foreign exchange losses for MTN Nigeria, significantly impacting the group’s overall financial performance.
In 2023, MTN Nigeria reported a substantial net forex loss of 740.4 billion naira ($569.54 million), causing a notable 341.9% increase in net finance costs to 951.5 billion naira.
The financial news had an immediate impact on MTN Group shares, which fell by 7% in morning trade, recovering slightly to stand 1.20% lower by 1236 GMT. Despite the challenges, the group affirmed its commitment to declare a dividend in line with the guidance of a minimum of 330 cents per share.
However, shares in MTN Nigeria experienced a more significant decline, tumbling by 9.96%. The Nigerian unit reported a loss after tax of 137 billion naira, a sharp contrast to the restated profit after tax of 348.7 billion naira in 2022.
In response to the financial challenges, MTN Nigeria took measures such as withholding its final dividend for 2023 and suspending its medium-term guidance for earnings before interest, tax, depreciation, and amortization margins. The company faces uncertainties in the wake of currency devaluation, prompting strategic adjustments to navigate the evolving economic landscape.
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Reporting by Godwin Okafor, The Naija247news in Lagos, Nigeria.
