MTN Nigeria Plc has encountered significant financial challenges, reporting a loss before tax of N177.8 billion compared to a pre-tax profit of N518.8 billion in the previous year. This downturn has resulted in a depletion of shareholders’ funds due to a massive foreign currency loss of N740 billion, a substantial increase from N81 billion reported in 2022.
Attributing these losses to operational shifts in the Nigerian foreign exchange market, including changes announced by the Central Bank of Nigeria (CBN) in June 2023, MTN highlighted the impact of currency devaluation and forex shortages on its financial performance. The company emphasized adopting an official exchange rate of N907.11/$1 as of December 31, 2023, indicating potential further losses if the current exchange rate persists.
Despite revenue growth of 22.69% year-on-year, totaling N2.469 trillion, MTN faced escalating finance costs and a staggering net FX loss of N740.434 billion. Consequently, the company reported a loss after tax of -N137.021 billion and negative earnings per share of -N6.38.
Moreover, MTN’s total borrowing surged by 70.69% year-on-year to N1.177 trillion, while the net loss for the year depleted retained earnings and shareholders’ funds to negative values of N208.0 billion and N40.8 billion, respectively.
In response to these challenges, MTN Nigeria opted not to propose a final dividend payment for the year ended December 31, 2023, citing the resultant loss. However, interim dividends of N117.48 billion were approved on July 27, 2023.
The company’s stock performance reflects shareholders’ concerns, with MTNN closing at N222.90 on February’s last day, marking a year-to-date loss of 15.6%. Additionally, MTNN experienced a 19% decline in stock value from February 1st.
MTN Nigeria attributed its financial difficulties to a challenging operating environment characterized by rising inflation, currency devaluation, and forex shortages. The removal of fuel subsidies in May 2023 and changes in the foreign exchange management system further exacerbated these challenges.
Despite these setbacks, MTN maintained strong free cash flow generation, amounting to N631.6 billion, signalling resilience amid adversity. However, the company acknowledged the significant impact of external factors on its business operations, particularly with increased costs and financial pressures.
