MTN Nigeria, the country’s largest telecommunications provider, has reported a significant loss after tax of ₦519 billion for the first half of 2024.
This marks a dramatic increase from the ₦85 billion loss recorded during the same period in 2023. The loss is largely attributed to fluctuations in foreign exchange rates and accelerating inflation, which have created a challenging macroeconomic environment for businesses across Nigeria.
The telecom giant’s financial difficulties stem primarily from its dollar-denominated obligations, including leases and financing costs. The sharp devaluation of the naira and increased currency volatility have substantially raised these expenses.
In a statement released on Wednesday, CEO Karl Toriola highlighted the adverse effects of these economic pressures: “Overall, these headwinds put pressure on consumers and the cost of doing business in the country. This includes, for MTN Nigeria, additional forex losses, leading to pressure on our period-end negative capital position.”
To address these FX-related challenges, MTN Nigeria has taken steps to reduce its exposure. The company has cut its outstanding letters of credit in dollars to $100 million as of June 2024 and is renegotiating lease agreements with IHS towers.
Additionally, MTN is seeking regulatory approval to increase tariffs as part of its strategy to mitigate some of the financial losses.
MTN’s data revenue reached ₦727 billion, surpassing voice revenue, which stood at ₦632 billion. The number of mobile money wallets also grew significantly, increasing from 3.1 million in H1 2023 to 5.5 million.
Despite these gains, MTN faced significant operational disruptions. The company saw a decrease of 8.6 million subscribers during the period and had to close its retail outlets nationwide following incidents of vandalism. This unrest was triggered by customers frustrated over blocked SIM cards, leading to further operational and reputational challenges for the telecom giant.
As MTN navigates these turbulent waters, the company’s strategies to manage FX risk and operational hurdles will be crucial in stabilizing its financial performance and sustaining its market position.
