MTN Nigeria recorded N887bn FX losses in H1 2024

MTN Nigeria Plc has reported a foreign exchange net loss of N887.6 billion in its operations for the first six months of 2024.

This represents a sharp increase of N433 billion or a 95.2 percent year-on-year (YoY) loss compared to the N454.6 billion recorded in the first half (H1) of 2023.

MTN reported the figure in its half-year audited financial results for 2024 filed on the Nigerian Exchange Limited (NGX) on Wednesday.

Breaking down the foreign exchange net loss, MTN said realised foreign exchange losses accounted for N367.9 billion, while unrealised foreign exchange losses amounted to N519.7 billion.

Commenting on the impact of naira devaluation on the company’s earnings, Karl Toriola, chief executive officer (CEO) of MTN Nigeria, said despite the strong topline performance, “the higher general inflation and significant naira depreciation impacted our cost p profile and eroded earnings”.

“Consequently, EBITDA Came under pressure, declining by 10.9%, and the EBITDA margin decreased by 17.4pp to 35.6%. Adjusting for the effects of forex on our operating costs, the EBITDA margin would have been 50.9%.

“The depreciation of the naira between the periods ended December 2023 and June 2024 also resulted in materially higher net forex losses of N887.7 billion (H1 2023 restated: N454.7 billion), arising from the revaluation of foreign currency denominated obligations.

“This led to a loss after tax of N519.1 billion compared to the restated loss of N85.6 billion in H1 2023 and a negative retained earnings and shareholders’ equity of N727.2 billion and N577.7 billion, respectively.

“Adjusting for the net forex losses, PAT would have been N102.3 billion (down by 56%). Further
adjusting for the impact of forex in our opex, PAT would have been up by 11.3% to N267.5 billion.”

MTN said it recorded a revenue of N1.53 trillion between January and June, representing a 32.6 percent appreciation compared to N1.15 trillion as of H1 2023.

In the period under review, the company’s financial report showed that voice and data generated N632.3 billion and N727.3 billion, respectively, indicating growth rates of 12.4 percent and 54.7 percent, respectively.

‘MACROECONOMIC CONDITIONS CHALLENGING’

On the business environment, Toriola said the macroeconomic conditions in Nigeria have been challenging during the period.

“The country has been dealing with rising inflation and the continued depreciation of the naira against the US dollar and other currencies,” he said.

“The inflation rate reached 34.2% in the month of June, with an average rate of 32.8% in the first half of the year, while the naira closed June 2024 at N1,505/US$ (December 2023: N907/US$) at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

“However, we are encouraged by the improving liquidity in the forex market in the period, which enabled us to reduce our exposure to foreign currency-denominated obligations.

“Additionally, the Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR) by 8pp to 26.75% in the first half of the year to control inflation, resulting in higher funding but reduced currency volatility.

“To ease the burden on consumers, the Federal Government has announced some interventions, including an upward review of the minimum wage, a 150-day duty-free import window for food commodities and other initiatives to increase food supply.”

Toriola said, overall, these headwinds put pressure on MTN consumers and the cost of doing business in the country.

“This includes, for MTN Nigeria, additional forex losses, leading pressure on our period-end negative capital position. In this context, the business also continues to manage the effects of the Nigerian Communications Commission’s (NCC) industry-wide NIN-SIM directive on our customer base.”

Toriola said the company will continue to prioritise initiatives to mitigate the pressures while accelerating MTN’s growth.

On July 30, MTN Nigeria announced the closure of all offices across the country due to the vandalisation of the company’s offices by aggrieved customers whose lines were disconnected in line with the government’s NIN-SIM linkage policy.

The Nigerian Communications Commission (NCC), however, ordered telecommunication operators to temporarily reconnect all phone lines that were blocked as part of the NIN-SIM verification exercise