MTN Nigeria has reported a loss for the full year 2023, its first in three years, after the devaluation of the Naira and rising cost of doing business ate into its margins.
The company disclosed a pre-tax loss of N177.8 billion, in stark contrast to the pre-tax profit of N518.8 billion recorded the previous year.
With this report, MTN noted that it grapples with a staggering N740 billion in forex losses, resulting in a complete depletion of shareholders’ funds. Profits fell 139% leading to negative earnings per share of -N6.38.
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According to MTN, “the loss was significantly due to operational changes to the Nigerian Foreign exchange market, including the abolishment of the segmented/parallel structure announced by CBN in June 2023.”
The telecommunications giant also noted that it used an official (NAFEM) exchange rate of N907.11/$1 as of 31 December 2023, suggesting losses could be wider if the current rate exchange rate between the naira and dollar persists by the end of March when it publishes its first quarter (Q1) report.
It is understood that MTN Nigeria’s operations are exposed to foreign currency volatility in its operating and capital expenditure. The most significant of these exposures relate to the tower lease costs, the majority of which have a portion indexed to the US dollar but are invoiced in Naira.
Tower lease costs are recognized in line with IFRS 16 (Leases) and IAS 21 (The effects of changes in foreign Exchange rates).
Check out some Key Highlights of MTN’s performance
– Revenue (2023 vs. 2022): N2.469 trillion vs. N2.012 trillion, +22.69% YOY.
– Operating Profit (2023 vs. 2022): N773.660 billion vs. N734.164 billion, +5.38% YoY
– Finance Income (2023 vs. 2022): N25.815 billion vs. N13.768 billion, +87.50% YOY
– Finance Cost (2023 vs. 2022): N236.927 billion vs. N147.287 billion, +60.86% YoY
– Net FX. Loss (2023 vs. 2022): N740.434 billion vs. N81.822 billion, +804.93% YoY
– (Loss)/Profit after tax (2023 vs. 2022): -N137.021 billion vs. N348.727 billion, -139.29% YoY
– (Loss)/Earnings per share (2023 vs. 2022): -N6.38 vs. N16.76, -138.07% YOY
– Total Borrowing (2023 vs. 2022): N1.177 trillion vs. N689.673 billion, +70.69% YOY
It is worth noting that the Nigerian Naira has continued to experience a significant free fall against the US dollar in the official and unofficial forex market, which has seen the local currency depreciate about 70% against the dollar since June last year due to the central bank’s efforts to unify the official and unofficial exchange rates.
Notably, the weakness of the Nigerian unit has made it the world’s worst performer against the greenback in 2023 after the Lebanese pound among currencies tracked by Bloomberg.
Also, the scarcity of dollars has resulted in the exodus of a number of international businesses that need to repatriate earnings from Nigeria, as companies grapple with a challenging operating environment. Experts blame the departures on the country’s economic crisis, especially the continuous decline in the value of its currency, the naira.