MTN Nigeria Records N392.7bn Loss Amid Inflation, Weak Naira

MTN Nigeria Communications (MTNN) Plc has reported a loss after tax of N392.7 billion for the first quarter (Q1) of 2024.
The company experienced significant financial strain due to a continued depreciation of the naira, reporting a net foreign exchange loss of N656.3 billion in Q1, 2024, contributing to a record high forex loss of N1.396 trillion since 2023.

In response to ongoing US dollar volatility, MTN Nigeria is reducing its dollar-denominated liabilities and reassessing costly tower lease contracts, aiming to align these expenses more closely with its naira earnings.

The company Q1 results released on the Nigerian Exchange showed that total subscribers increased by 1.3 per cent to 77.7 million; active data users increased by 8.0 per cent to 44.5 million; active mobile money (MoMo PSB) wallets increased by 48.7 per cent to 4.8 million; while service revenue increased by 32.0 per cent to N747.3 billion.

Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 1.9 per cent to N297.0 billion, while EBITDA margin decreased by 13.9 percentage points (pp) to 39.4 per cent.

Loss after tax stood at N392.7 billion. Meanwhile, profit after tax (PAT) adjusted for the net forex loss declined by 57.8 per cent to N47.1 billion, while earnings per share (EPS) declined to negative N18.63.
Net loss for the quarter resulted in a further increase in our accumulated losses and negative shareholders’ funds to N599.2 billion and N434.7 billion, respectively

Positive free cash flow of N117.2 billion, down by 35.6 per cent from N182.1 billion in Q1 2023, was recorded.
Speaking on the Q1 performance, CEO of MTN Nigeria, Karl Toriola said, “the operating environment in the first quarter remained very challenging, with rising inflation and continued naira depreciation off an already low base.”

He added that, “our solid commercial operations enabled us to deliver service revenue growth of 32.0 per cent, which slightly exceeded the average inflation rate in the quarter. This growth was led by double-digit growth in voice, data, and digital services; as well as favourable base effects in Q1, 2023 arising from the challenge in that period (including the redesign of the naira, which resulted in cash shortages).”

Toriola stated that the further depreciation of the naira in Q1 resulted in a materially higher net forex loss of N656.4 billion, arising from the revaluation of foreign currency-denominated obligations, saying that this led to a loss after tax of N392.7 billion compared to a restated PAT of N108.4 billion in Q1 2023.

“This has resulted in negative retained earnings and shareholders’ equity at the end of March 2024 of N599.2 billion and N434.7 billion, respectively,” he noted.

On outlook for the company, he explained that, “we will continue to evaluate the conditions and developments in our operating environment and evolve our approach to address the negative capital position as required.

“We have obtained the necessary accommodations from our lenders, as pertains to any impacts on our loan agreements in regard to the restatement of our financial statements.

“We also have in place accommodations relating to any potential breaches in our covenants occasioned by the major currency devaluation and the resultant negative net asset position. This will enable us to continue executing our strategy and implement the interventions we have outlined.”