MTN Nigeria loses N514.9bn after tax in 9M 2024 to naira devaluation

• MTN Nigeria lost N514.9 billion to naira depreciation
• The telcos’ subscriber base declined due to NIN-SIM linkage
• MTN may hike tariff to mitigate losses

Telecommunications giant, MTN Nigeria, lost N514.9 billion after tax in the nine months of 2024 to naira depreciation, which increased its foreign currency-denominated obligations.

According to its unaudited results for the nine months ended September 30, 2024, released on Thursday, October 31, the company suffered a 3,335 per cent loss from the N15.0 billion loss recorded in the same period of 2023.

The loss consequently impacted the company’s retained earnings and shareholders’ equity, which amounted to N723.0 billion and N573.6 billion, respectively, as of September 2024.

Commenting on the results, MTN Nigeria CEO, Karl Toriola, said the company would have had a Profit After Tax (PAT) of N118.5 billion, which is a 59.2 per cent decrease year-on-year, but for the forex revaluation losses.

Toriola added that the company showed resilience despite the country’s current economic situation as reflected in the positive free cash flow, supported by favourable working capital movements and reduced capital expenditure

He said, “As we manage the effects of the ongoing macroeconomic headwinds on our business, we remain focused on initiatives to accelerate our earnings recovery profile, strengthen our balance sheet, and restore our net asset position faster.”

MTN Nigeria’s subscriber base affected by NIN-SIM linkage

The subscriber base of MTN Nigeria saw a 0.9 per cent decline during the nine-month, reducing to 77.0 million. The decline is attributed to the recent National Identity Number (NIN)-SIM card verification exercise mandated by the Federal Government, which led to the deactivation of 64.3 million lines not linked to NIN.

The company, however, said it is working towards reconnecting those affected to reduce churn while extracting increased value from the market.

During the period, the telcos’ active data users increased by 5.1 per cent to 45.3 million, while active mobile money (MoMo) wallets decreased by 21.8 per cent to 2.8 million, while its service revenue increased by 33.6 per cent to N2.4 trillion.

The company’s recent renegotiation of its tower lease contracts with IHS Towers increased its savings in operating expenses, which consequently increased its earnings before interest, tax, depreciation and amortisation (EBITDA) margin by 2.3 per cent.

The financial results, however, showed that the company’s EBITDA fell by 5.3 per cent year-on-year to N860.2 billion, with the EBITDA margin decreasing by 14.9 percentage points to 36.3 per cent.

Telco may hike tariff to mitigate losses

There are indications that the telco may hike tariffs to mitigate the impact of losses occasioned by the continued depreciation of the naira.

Recall that Toriola had warned of the company’s imminent shutdown if the telecommunications tariff is not hiked, noting that the company now operates on its reserves, which is not sustainable over time.

According to the 2023 Sustainability Report, MTN still relies on profits accrued over the last two decades, with a corporate social investment of N2.6 billion.

In the first quarter of 2024, MTN Nigeria recorded a N519.1 billion loss due to naira depreciation and a high inflation rate.

The situation is similar to the experience of other telcos that have recorded losses due to the naira devaluation.

MTN introduces recyclable SIM cards to promote sustainability in Nigeria

Meanwhile, TheRadar reported that MTN Nigeria announced the introduction of paper-based, biodegradable, eco-friendly SIM cards in line with its Project Zero goals to reduce greenhouse gas (GHG) emissions and achieve net zero emissions by 2040.

According to the company, the biodegradable paper-based SIM card is safer for the environment, as it supports the management of products throughout their lifecycle in a manner that promotes circularity and reduces waste.