MTN group points to recovery after Naira devaluation drives losses

The CEO of MTN Group has said that the worst should be over for the company as its Nigeria unit recovers, after a Naira devaluation pushed the group to an annual pre-tax loss of 4.4 billion rand ($243 million). Nigeria has suffered chronic dollar shortages that have forced authorities to devalue the Naira as part of the government’s measures to stabilise the currency and attract investment. Coupled with high inflation and interest rates, this has driven up costs and widened MTN Nigeria’s pre-tax loss by more than 200% to N550.3 billion. At group level, South Africa-headquartered MTN reported a loss before tax of 4.4 billion rand in the year to December 31, from a 2023 profit of 12.2 billion rand. The Nigeria business has a number of initiatives aimed at restoring profit and addressing its position when liabilities exceed assets, including renegotiating tower leases and a tariff hike, which was approved in January.
“That pain which we’ve had for 18 months, is abating somewhat … the business is growing very strongly. So I’m actually very bullish and confident that we’ll see strong recovery in Nigeria,” Group CEO Ralph Mupita said in a media call. MTN Group, which has 291 million customers across 16 markets in Africa, saved 3.8 billion rand in costs, with 1.2 billion coming from the renegotiated tower leases, CFO Tsholofelo Molefe told Reuters. In Sudan, the group’s operational and financial performance was hampered by the armed conflict in the country, resulting in impairments of 11.7 billion rand.
Mupita said that MTN has “started to see sites coming back on air” in areas where there was ongoing conflict such as in the capital Khartoum, where its network was down since April 2023. By 1220 GMT, MTN shares were 2.39% higher. “If you look at the underlying performance, which is service revenue at constant currency, it does look strong. Management team is executing well,” Peter Takaendesa, head of equities at Mergence Investment Managers, said. “The challenge is just those macro and currency issues, which they really have limited control over.” Group service revenue decreased by 15% to 177.8 billion rand but rose 14% in constant currency terms.