MTN Group Faces Dramatic Profit Decline Amidst Currency Challenges in Nigeria

MTN Group’s annual profits plummeted by 69% due to the Nigerian naira’s devaluation and operational issues in Sudan. The Nigerian segment faced rising costs and substantial losses, prompting initiatives to restore profitability. Despite challenges, optimism persists about recovery and moderate growth in service revenue in South Africa, with future dividend projections indicating potential stability.

MTN Group, Africa’s largest telecom operator, reported a staggering 69% decline in its annual earnings primarily due to the devaluation of the Nigerian naira and operational difficulties in Sudan. The company’s headline earnings per share (HEPS) fell to 98 cents for the year ending December 31, a significant drop from 315 cents in the previous year.

The Nigerian economy has faced ongoing dollar shortages necessitating the naira’s devaluation as part of government efforts to stabilize the currency and attract foreign investment. The resultant high inflation and increased interest rates have substantially raised operational costs, leading to an over 200% increase in MTN Nigeria’s pre-tax loss, which reached 550.3 billion naira (approximately $355.76 million).

MTN Nigeria is undertaking various initiatives to restore profitability, including renegotiating tower leases and a recently approved tariff hike. CEO Ralph Mupita expressed optimism about recovery in Nigeria, stating, “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.”

In Sudan, the armed conflict has severely affected MTN’s operational and financial performance, resulting in impairments totalling 11.7 billion rand (about $643.40 million). Mupita noted that there have been signs of recovery with network services being restored in regions previously affected by conflict, including the capital city, Khartoum.

MTN Group, with 291 million customers across 16 African markets, reported a 15% decrease in overall service revenue, totaling 177.8 billion rand, though revenue grew 14% in constant currency terms. In South Africa, service revenue improved by 3.1%, driven by growth in data, fintech, digital, and enterprise segments. The company announced a final dividend of 345 cents per share, projecting a minimum dividend of 370 cents for the financial year ending December 2025.

In summary, MTN Group has experienced substantial challenges in Nigeria and Sudan, leading to a significant decline in annual profits. The Nigerian market’s issues stemmed from currency devaluation and economic instability, while operations in Sudan were affected by conflict. Nonetheless, the company is implementing strategies aimed at recovery and has witnessed some positive indicators, particularly in South Africa. Future dividend expectations suggest a cautious optimism moving forward.

Original Source: telecom.economictimes.indiatimes.com