MTN Group, Africa’s largest telecoms company, has reported a sharp drop in its annual profit due to the severe impact of Nigeria’s currency devaluation. The South African-based telecoms giant, which derives a significant portion of its revenue from Nigeria, saw its earnings slump as the naira weakened dramatically against the dollar.
Thank you for reading this post, don't forget to subscribe!In its 2023 financial results, MTN disclosed that its headline earnings per share (HEPS)—a key profitability measure in South Africa—fell by more than 80%, primarily due to foreign exchange losses. The company attributed the steep decline to Nigeria’s currency devaluation, which has significantly affected the repatriation of earnings and increased operational costs.
Nigeria, MTN’s largest and most profitable market, has faced severe economic challenges following foreign exchange policy changes introduced by the Central Bank of Nigeria (CBN). In June 2023, the government floated the naira to unify multiple exchange rates, leading to a sharp depreciation of the local currency. The move, aimed at attracting foreign investment, has, however, resulted in increased financial strain on businesses heavily reliant on foreign exchange transactions.
MTN’s CEO, Ralph Mupita, noted that the forex devaluation in Nigeria had a “material impact” on the company’s financial performance. The currency devaluation led to higher costs of operations, affecting everything from network expansion to equipment procurement. Additionally, MTN faced challenges in repatriating earnings from Nigeria due to dollar shortages, further exacerbating financial strain.
Despite these setbacks, MTN reported growth in its subscriber base and an increase in data revenue, reflecting strong demand for digital services. The company also stated that it is implementing measures to mitigate currency volatility risks, including optimizing capital allocation and engaging with Nigerian regulators to ensure a stable business environment.
Looking ahead, MTN remains committed to investing in Nigeria’s telecoms sector, emphasizing the long-term growth potential of Africa’s most populous nation. However, analysts warn that continued currency fluctuations and economic uncertainties could pose ongoing risks for the telecoms giant.
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