MTN Nigeria’s Earnings Plunge to ₦514.9 Billion Following Naira’s Sharp Depreciation
MTN Nigeria Reports Significant Loss After Tax of ₦514.9 Billion in Q3 2024
Despite a resilient performance, MTN Nigeria’s financial results for the nine months ending September 30, 2024, show a loss after tax amounting to ₦514.9 billion. This is a stark contrast to the profit after tax of ₦4.1 billion recorded 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 significant drop in profitability is primarily attributed to the devaluation of the naira, which reflects a decrease of ₦4.1 billion compared to the ₦519.1 billion reported in the half-year results.
Surprisingly, service revenue has increased by 33.6% to ₦2.4 trillion, and the company’s total subscriber base has declined by 0.9% to 77.0 million, primarily due to the NIN-SIM linkage regulations, which led to the deregistration of certain Subscriber Identity Module (SIM) cards by telecom companies.
Data usage has witnessed a 5.1% growth, reaching 45.3 million subscribers, while the number of active mobile money (MoMo PSB) wallets decreased by 21.8% to 2.8 million. Meanwhile, Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) has declined by 5.3% to ₦860.2 billion, with the EBITDA margin decreasing by 14.9 percentage points to 36.3%.
MTN Nigeria’s CEO, Karl Toriola, described the company’s performance as “resilient,” citing the ongoing macroeconomic challenges and regulatory hurdles as obstacles to overcome. Despite these challenges, the company has sustained its growth in underlying operating performance, he noted.
“The nine-month period has been marked by high inflation, averaging 32.8% (compared to 24.5% in 2023), and rising energy prices, affecting consumers’ spending power and business activity,” Toriola stated. “However, we have remained focused on operational efficiency and driving growth in our commercial operations.”
In an effort to address the economic environment, the Central Bank of Nigeria (CBN) has increased the Monetary Policy Rate (MPR) by 8.5% to 27.25%, helping to curb inflation and improve liquidity in the forex market. MTN Nigeria has also announced plans to raise ₦50 billion through the issuance of commercial paper as part of its ₦250 billion Commercial Paper Issuance Programme, intended to enhance its short-term working capital and funding options.
The recent depreciation of the naira has severely impacted the company’s earnings, affecting its ability to distribute dividends to shareholders. In 2023, MTN Nigeria reported a significant increase in net foreign exchange losses, amounting to ₦740.4 billion, a 805% rise compared to ₦81.8 billion in 2022. The CBN’s introduction of a floating exchange rate in June 2023 has also contributed to the naira’s depreciation, with the exchange rate increasing from ₦461.1/US$ in December 2022 to ₦907.1/US$ in December 2023.
