MTN posts half-year loss as Nigeria currency devaluation weighs

MTN Group reported a half-year loss on Monday as Africa’s biggest telecom operator grappled with the devaluation of the Nigerian Naira and operational challenges in Sudan. It said it was working on cutting costs and reiterated it was on track to reach a target to sell off non-core assets by next year. The company reported a loss before tax of 9 billion rand ($507 million) in the six-month period ended June 30, compared with a restated profit of 8.3 billion rand a year earlier. “The further devaluation in the Naira against the U.S. dollar … and the ongoing conflicts in Sudan had the most significant impact on reported results,” CEO Ralph Mupita said. Nigeria has suffered chronic dollar shortages that have forced authorities to devalue the Naira twice in less than a year, as part of the new government’s measures to stabilise the currency and attract investment.
MTN Nigeria, which was the group’s largest business, is now its second biggest by revenue. The unit has a number of initiatives aimed at restoring profit and addressing its negative equity position, including concluding renegotiation earlier this month on tower lease terms with tower operator IHS. The improved commercial terms are expected to result in annualised cost savings of between N100 billion to N110 billion, with annualised EBITDA margin benefit of 4 to 6 percentage points, Mupita told investors. This is “not a silver bullet in addressing negative equity,” Mupita said, but added discussions continued on proposed tariff increases with Nigerian authorities that could help. MTN Group, which has 288 million customers across 18 markets in Africa, said its group service revenue decreased 20.8% to 85.3 billion rand. In constant currency, group service revenue rose 12.1%.
The company has raised 21.7 billion rand so far as part of its 25 billion rand non-core asset sales programme and should reach its target by next year, Mupita said on a post-earnings media call. The telecom operator reduced its stakes in MTN Ghana and MTN Uganda during the reporting period for a combined 1.7 billion rand. There will be further stake sales in Ghana of about 2.1%, and in Cameroon, Ivory Coast and Nigeria, according to Mupita.