MTN Nigeria Records Worst Ever Half-Year Loss

MTN Nigeria Records Worst Ever Half-Year Loss

MTN Nigeria, the local subsidiary of Africa’s largest mobile network operator, has reported its worst-ever half-year loss, marking a significant financial setback for the company. According to its earnings report, MTN Nigeria experienced a six fold surge in loss after tax, amounting to ₦519 billion for the first half of 2024.

Key Factors Behind the Loss

Several factors contributed to this unprecedented loss:

1. Foreign Exchange Losses: The devaluation of the naira led to a massive foreign exchange loss for MTN Nigeria. The net foreign exchange loss surged to ₦887.7 billion from ₦454.7 billion a year earlier. This was primarily due to the increased cost of foreign-currency obligations such as borrowings and trade payables.
2. Rising Inflation: Nigeria’s inflation rate reached 34.2% in June 2024, with an average rate of 32.8% for the first half of the year. This high inflation significantly impacted MTN Nigeria’s operating costs, eroding its earnings. Direct network operating costs more than doubled to ₦586.7 billion, while other operating expenses grew by 103.3%.
3. Economic Conditions: The challenging macroeconomic conditions in Nigeria, including the continued depreciation of the naira against the US dollar and other currencies, further exacerbated the financial strain on MTN Nigeria.
4. Subscriber Base Impact: Despite barring 8.6 million subscribers in line with the Nigerian Communications Commission (NCC) directive, MTN Nigeria managed to limit the decline in its subscriber base to 280,000, resulting in a 2.9% year-on-year increase to 79.4 million customers.

Looking Ahead

MTN Nigeria’s CEO, Karl Toriola, acknowledged the challenging economic environment and its impact on the company’s financial performance. However, he emphasized the company’s commitment to navigating these difficulties and finding ways to mitigate the impact of rising costs and foreign exchange losses.

As MTN Nigeria continues to adapt to the evolving economic landscape, it remains focused on leveraging its extensive network and customer base to drive future growth and stability.