The CEO of MTN Group (MTNJ.J) has expressed confidence that the worst is over for the company as its Nigeria unit begins to recover from the effects of a naira devaluation. The currency depreciation had contributed to an annual pre-tax loss of 4.4 billion rand ($243 million) for the group.
Nigeria has been grappling with persistent dollar shortages, prompting authorities to devalue the naira in a bid to stabilize the currency and attract investment. However, the move, combined with high inflation and interest rates, significantly increased costs for businesses. As a result, MTN Nigeria (MTNN.LG) saw its pre-tax loss surge by more than 200% to 550.3 billion naira ($355.76 million).
At the group level, the South Africa-based telecom giant reported a pre-tax loss of 4.4 billion rand for the year ending December 31, 2024, a sharp contrast to its 2023 profit of 12.2 billion rand.
Recovery Initiatives in Nigeria
MTN Nigeria has implemented several measures aimed at restoring profitability and addressing its negative asset position. These include renegotiating tower leases and introducing 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,” said Group CEO Ralph Mupita during a media call.
Cost-Saving Measures and Market Performance
MTN Group, which serves 291 million customers across 16 African markets, managed to save 3.8 billion rand in costs, with 1.2 billion rand coming from renegotiated tower leases, according to CFO Tsholofelo Molefe.
Meanwhile, in Sudan, the company’s operations and financial performance were significantly impacted by ongoing armed conflict, leading to impairments of 11.7 billion rand. However, Mupita noted that the company has “started to see sites coming back on air” in conflict-ridden areas, including the capital, Khartoum, where its network had been down since April 2023.
By 12:20 GMT, MTN shares had risen by 2.39%.
Expert Insights and Revenue Performance
Peter Takaendesa, head of equities at Mergence Investment Managers, acknowledged that while MTN’s service revenue at constant currency remains strong, macroeconomic and currency fluctuations pose significant challenges.
“The management team is executing well. The challenge is just those macro and currency issues, which they really have limited control over,” Takaendesa commented.
MTN Group’s overall service revenue fell by 15% to 177.8 billion rand. However, when adjusted for constant currency, revenue actually increased by 14%.
Exchange Rates:
- $1 = 1,546.82 naira
- $1 = 18.1888 rand
