MTN Nigeria Faces N740 Billion Forex Losses, Shareholder Funds Impacted.

In a significant financial downturn, Mtn Nigeria Plc has recorded a loss before tax of N177.8 billion, a stark contrast to the N518.8 billion pre-tax profit reported a year prior. This downturn has led to a depletion of shareholders’ funds.

The primary culprit behind this staggering loss is a massive foreign currency deficit amounting to N740 billion, a sharp increase from N81 billion in 2022. Notably, this marks the first instance of the company incurring a loss since its inception as a quoted entity in Nigeria.

Attributing these losses to operational shifts in the Nigerian foreign exchange market, including reforms initiated by the Central Bank of Nigeria (CBN) in June 2023, MTN highlighted the abolishment of the segmented/parallel structure as a significant contributing factor.

Moreover, utilizing an official exchange rate of N907.11/$1 as of December 31, 2023, MTN hinted at the potential for even wider losses if the current exchange rate persists until the publication of its Q1 results in March.

Key Financial Highlights:

• Revenue for 2023 stood at N2.469 trillion, marking a notable increase of 22.69% compared to N2.012 trillion in 2022.
• Operating profit grew to N773.660 billion in 2023 from N734.164 billion in 2022, reflecting a 5.38% year-on-year (YoY) increase.
• Finance income surged by 87.50% YoY to N25.815 billion in 2023 from N13.768 billion in 2022.
• Conversely, finance costs escalated by 60.86% YoY to N236.927 billion in 2023 compared to N147.287 billion in 2022.
• The company witnessed a substantial increase in net FX losses, soaring to N740.434 billion in 2023 from N81.822 billion in 2022, marking an 804.93% YoY increase.
• Reporting a loss after tax of -N137.021 billion in 2023, a stark contrast to the profit of N348.727 billion recorded in 2022, signaling a YoY decline of 139.29%.
• Loss per share for 2023 amounted to -N6.38, compared to N16.76 in 2022, reflecting a YoY decrease of 138.07%.
• Total borrowing surged to N1.177 trillion in 2023 from N689.673 billion in 2022, representing a 70.69% YoY increase.

Additionally, despite these challenges, MTN Nigeria observed growth in various operational metrics, including a 5.3% increase in total subscribers, a 12.7% rise in active data users, and a significant 163.2% surge in active mobile money (MoMo PSB) wallets.

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Moreover, the company maintained robust free cash flow generation, witnessing an 11.6% YoY increase to N631.6 billion.

In light of the substantial currency devaluation and its impact on retained earnings, MTN Nigeria announced the suspension of a final dividend payment for the year ending December 31, 2023, following the significant loss incurred. However, interim dividends approved on July 27, 2023, amounted to N117.48 billion for the said period.

Despite these challenges, MTN Nigeria remains committed to navigating the complex operating environment characterized by rising inflation, currency devaluation, and geopolitical disruptions. The company’s resilience is evidenced by its strong operational performance amidst these adversities.

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