MTN Nigeria Plc’s 2023 second-quarter results have revealed that pre-tax profits decreased dramatically by 64% to N44.6 billion.
As a result, its half-year profits decreased to N200.3 billion from N268.6 billion during the same period in 2022.
Like the majority of Nigerian businesses, MTN also had a N131.4 billion foreign exchange loss, which reduced profitability.
Although there were unrealized forex losses for H1 as a result of the immediate impact, the company is optimistic that the removal of the fuel subsidy and the liberalization of the forex regime will attract foreign investment and have a positive overall impact on their long-term outlook.
Due to the nature of their tower contracts, the EBITDA margin was not significantly impacted in H1, but H2 is anticipated to see the full impact of the exchange rate.
The EBITDA margin might be directly lowered by about 1.3 percentage points by a 10% change in the exchange rate.
The effect on borrowing expenses in H2 will rely on future changes in the currency rate at that time.
MTN’s profits were negatively impacted by the unification of the currency rate, which resulted in a substantial paper loss of N131.4 billion.
Accounting requirements demand that these losses be recognized even if they have not yet been experienced because of the possibility that they will.
Despite this obstacle, the soundness of MTN’s business model was underlined in the report by the company’s strong operating profit margins.
Key highlights Q2 results:
Revenue N590.6 billion +23.3% YoY
Gross Profit N393.5 billion +22.9% YoY
Operating Profits N214.9 billion +24.3% YoY
Pre-tax profits N44.6 billion -64.3% YoY
Forex losses of N131.4 billion
Finance cost N182 billion +259% YoY
Total debts N855 billion vs N689.6 billion (December 2022)
Net Assets N258.2 billion vs N355.6 billion (December 2022)
Working capital -N588.7 billion
Gross margins 2023 Q2 66.64% vs 66.84% YoY
Operating profit margin 2023 Q2 36.4% vs 36.1% YoY
Earnings per share 2023 Q2 N1.35 vs N4.17 YoY
Proposed dividends N5.6/share
Other key details Half-year
EBITDA Half year N614.5 billion +20.6% YoY grew by 20.6%
to N614.5 billion
EBITDA margin (half year) declined by 0.6 percentage points (pp) to 53.0%
Mobile subscribers 77.1 million +4% YoY
Data users 41 million +11.5%
Active mobile money (MoMo PSB) wallets 3.1 million, +1.1 million YoY
Total data traffic +45.6%,4G traffic constituted 82.5% (up by 5.2pp) and 5G constituted 21% on all 5G-colocated clusters.
