Saturday, 02 March 2024 04:45

Shareholders funds wiped out as MTN Nigeria suffers N740bn loss on massive Naira devaluation

Rate this item
(1 Vote)

MTN Nigeria Plc has reported a loss before tax of N177.8 billion compared to a pre-tax profit of N518.8 billion a year earlier. The losses resulted in a wipe-out of shareholders’ funds. 

The company attributed the losses to a massive foreign currency loss of N740 billion up from N81 billion reported in 2022.

This is the company’s first-ever loss since it became a quoted company in Nigeria.

According to MTN, “the loss was significantly due to operational changes to the Nigerian Foreign exchange market, including the abolishment of the segmented/parallel structure announced by CBN in June 2023.”

MTN also stated that it has used an official (NAFEM) exchange rate of N907.11/$1 as of 31 December 2023 suggesting losss could be wider if the current exchange rate between the naira and dollar persis by the end of March when it publishes its Q1 results.

Key Highlights 

  • Revenue (2023 vs. 2022): N2.469 trillion vs. N2.012 trillion, +22.69% YoY. 
  • Operating Profit (2023 vs. 2022): N773.660 billion vs. N734.164 billion, +5.38% YoY 
  • Finance Income (2023 vs. 2022): N25.815 billion vs. N13.768 billion, +87.50% YoY 
  • Finance Cost (2023 vs. 2022): N236.927 billion vs. N147.287 billion, +60.86% YoY 
  • Net FX Loss (2023 vs. 2022): N740.434 billion vs. N81.822 billion, +804.93% YoY 
  • (Loss)/Profit after tax (2023 vs. 2022): -N137.021 billion vs. N348.727 billion, -139.29% YoY 
  • (Loss)/Earnings per share (2023 vs. 2022): -N6.38 vs. N16.76, -138.07% YoY 
  • Total Borrowing (2023 vs. 2022): N1.177 trillion vs. N689.673 billion, +70.69% YoY 
  • Total subscribers increased by 5.3% to 79.7 million
  • Active data users increased by 12.7% to 44.6 million
  • Active mobile money (MoMo PSB) wallets increased by 163.2% to 5.3 million
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) grew by 12.3% to N1.2 trillion
  • EBITDA margin decreased by 4.5 percentage points (pp) to 48.7%
  • Net loss for the year has resulted in a depletion of its retained earnings and shareholders’ fund to negative N208.0 billion and N40.8 billion, respectively

Other updates

MTN Nigeria communicated that due to the substantial currency devaluation and its repercussions on retained earnings, the Directors will not propose a final dividend payment, given the resultant loss for the year ended December 31, 2023. 

  • However, it is important to note that MTN Nigeria had on July 27, 2023, approved interim dividends of N117.48 billion for the year ending December 31, 2023, amounting to N5.60 kobo per ordinary share. 
  • MTN Nigeria Communications Plc (MTNN) closed at N222.90 on the last day of February, representing a year-to-date (YtD) loss of 15.6% for shareholders. 
  • Shareholders’ worries are compounded by the fact that MTNN has lost 19% of the stock’s value from February 1st to date. 
  • MTN also stated that despite the losses, they maintained strong free cash flow generation (up 11.6% YoY to N631.6 billion).

Company Commentary: “2023 witnessed a very challenging operating environment characterised by rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in Q1 arising from a redesign of the naira.

These factors created severe headwinds for our customers and our business during the year. The inflation rate increased throughout the year, reaching 28.9% in December 2023 – the highest reading in 18 years – with an average rate of 24.5%.

This was further exacerbated by higher fuel prices, arising from the removal of the fuel subsidy in May 2023, with the average prices of diesel and petrol up by 66.4% and 257.1% in 2023 to N1,416.8/litre and N600/litre, respectively. In June 2023, the Central Bank of Nigeria (CBN) adopted a more liberal foreign exchange management system and reintroduced the ‘willing buyer, willing seller’ model.

This has resulted in a 96.7% unfavourable movement in the exchange rate against the US dollar from N461.1/US$ in December 2022 to N907.1/US$ (Nigerian Autonomous Foreign Exchange Market (NAFEM) rate) in December 2023.

This development contributed meaningfully to the upward pressure on the cost of doing business in Nigeria, and for MTN Nigeria in particular, significantly increased the costs in relation to our tower leases.”

 

Nairametrics

April 18, 2024

CBN’s new monetary tightening measures starve banks of loanable funds, with dire consequences for the…

Commercial banks, grappling with the Central Bank of Nigeria's (CBN) monetary tightening measures aimed at…
April 12, 2024

At cost totaling the 2024 budgets of the 36 states plus FCT, Lagos-Calabar project is…

Presidential candidate of the Peoples Democratic Party (PDP) in the 2023 election, Atiku Abubakar, has…
April 14, 2024

I've spent 25 years studying the brain—I never do these 4 things that destroy our memory as we age

As a neuroscientist, I've spent the last 25 years researching the science of memory. A…
April 13, 2024

A new camera can undress people almost in real time—to send a message about AI

Nuca, a new deepfake camera, is an art project that shows how artificial intelligence can…
April 18, 2024

10 passengers killed as vehicle runs into explosives planted by roadside in Borno

At least 10 passengers in a commercial vehicle have reportedly died after the automobile encountered…
April 18, 2024

Here’s the latest as Israel-Hamas war enters Day 195

Hezbollah launches missiles and drones at northern Israel, wounding 14 Israeli soldiers Lebanon's Hezbollah said…
April 15, 2024

Winning funding proposals written by generative AI: Should that matter to you?

Generative AI is getting better every day. We now have ChatGPT4, Claude 3, Gemini, Perplexity,…
April 10, 2024

Nigeria’s Super Falcons qualify for 2024 Olympics at South Africa’s expense

Super Falcons of Nigeria have qualified for the women’s football event of the 2024 Olympics…

NEWSSCROLL TEAM: 'Sina Kawonise: Publisher/Editor-in-Chief; Prof Wale Are Olaitan: Editorial Consultant; Femi Kawonise: Head, Production & Administration; Afolabi Ajibola: IT Manager;
Contact Us: [email protected] Tel/WhatsApp: +234 811 395 4049

Copyright © 2015 - 2024 NewsScroll. All rights reserved.