In contrast to a pre-tax profit of N518.8 billion the previous year, MTN Nigeria Plc has declared a loss before taxes of N177.8 billion. Investors’ money was completely lost as a result of the losses.
The corporation blamed the losses on a significant foreign exchange loss that increased from N81 billion in 2022 to N740 billion.
This represents the company’s first loss since going public in Nigeria.
The elimination of the segmented/parallel structure that the CBN announced in June 2023, among other operational changes to the Nigerian foreign exchange market, was a major factor in the loss, according to MTN.
When MTN releases its Q1 earnings at the end of March, it will have utilized an official (NAFEM) exchange rate of N907.11/$1 as of December 31, 2023. This suggests that losses could be worse if the present exchange rate between the naira and the dollar persists.
Additional updates MTN Nigeria said that the Directors will not recommend a final dividend payment, given the resulting loss for the year ending December 31, 2023, as a result of the significant currency devaluation and its effects on retained earnings.
It is noteworthy, meanwhile, that MTN Nigeria approved interim dividends of N117.48 billion on July 27, 2023, for the year ending December 31, 2023. This translates to N5.60 kobo for each ordinary share.
MTN’s Comment: “The year 2023 was marked by a highly demanding operational environment, characterized by escalating inflation, depreciating currency values, and shortages of foreign exchange, further complicated by geopolitical unrest and cash shortages in the first quarter due to naira redesign.”
“These circumstances produced significant headwinds for our clients and our business throughout the year. With an average rate of 24.5%, the inflation rate rose throughout the year, peaking at 28.9% in December 2023—the highest number in 18 years.”
“This was made worse by increased fuel costs, which resulted from the fuel subsidy being removed in May 2023. The average price of gasoline and diesel increased by 257.1% and 66.4%, respectively, to N1,416.8 and N600/liter in 2023. The ‘willing buyer, willing seller’ paradigm was reinstated and a more liberal foreign exchange management system was established by the Central Bank of Nigeria (CBN) in June 2023.”
“The Nigerian Autonomous Foreign Exchange Market (NAFEM) rate moved from N461.1/US$ in December 2022 to N907.1/US$ in December 2023, a 96.7% unfavorable change in the exchange rate vs the US dollar as a result.”
“This development significantly increased the costs associated with our tower leases for MTN Nigeria, and it also contributed meaningfully to the upward pressure on the cost of doing business in Nigeria.”
