MTN Nigeria Plc recorded a loss before tax of N177.8bn compared to a pre-tax profit of N518.8bn in the previous year.
This significant shift was attributed to the telecom operator’s substantial forex loss of N740.4bn, a consequence of the steep devaluation of the naira in 2023.
This was disclosed in the company’s audited results for the year ended 31 December 2023 released on Friday.
The financial downturn, as indicated by MTN, resulted in a reported loss after tax amounting to N137bn. This sharp contrast was evident compared to the restated Profit After Tax (PAT) of N348.7bn reported in 2022.
The telco stated that the repercussions of this financial decline extended to negative retained earnings and shareholders’ equity, reported at N208bn and N40.8bn, respectively, as of December 2023.
Adjusting for the substantial net forex loss, the restated PAT would have been N344.5bn, reflecting a 14.3 percent decrease.
The report stated, “The significant devaluation of the naira in 2023 resulted in a materially higher net forex loss of N740.4bn (2022 restated: N81.8bn), reflected within net finance costs, which resulted in a reported loss after tax of N137bn compared to a restated PAT of N348.7bn in 2022.”
On 14 June 2023, the Central Bank of Nigeria announced changes in the Nigerian forex operations, which required the immediate collapse of all segments of the market into the investor and exporter window and reintroduced the ‘willing buyer, willing seller’ model to improve forex liquidity.
This led to a 96.7 percent movement in the exchange rate since the announcement of N907/US$ (NAFEM rate) at the end of December 2023 as the market seeks an equilibrium level.
MTN said this significant movement in the exchange rate impacted its operations especially its operating expenses and net finance costs.
“The most significant of these exposures relate to the tower lease costs, which comprised the bulk of the 45-50 percent foreign currency exposure in our operating expenses in 2023.”
MTN noted that majority of the lease costs were indexed to the dollar but were invoiced and paid in 9zzt.
“Our tower lease costs are recognised in line with IFRS 16 and IAS 21, which has had several impacts on our financial performance,” the operator said.
The CEO of MTN Nigeria, Karl Toriola commented, “2023 witnessed a very challenging operating environment characterized 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 percent in December 2023 – the highest reading in 18 years, with an average rate of 24.5 percent.
The CEO said 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 percent in 2023 to N1,416.8/litre and N600/litre, respectively.
To mitigate the effects of these headwinds on its operations, Toriola said the company continued to invest in network infrastructure – with a disciplined focus on value-based capital allocation and efficiencies – to enhance capacity and expand coverage.
“This enabled us to meet the rising demand for data and, coupled with compelling and competitive propositions for our customers, accelerate the growth of our commercial operations,” he said.
Other key highlights of the report include: Total subscribers increased by 5.3 percent to 79.7 million; Active data users increased by 12.7 percent to 44.6 million: Active mobile money (MoMo PSB) wallets increased by 163.2 percent to 5.3 million; Service revenue increased by 22.4 percent to N2.5tn; Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 12.3 percent to N1.2tn; EBITDA margin decreased by 4.5 percentage points (pp) to 48.7 percent.
