MTN Nigeria plunges into N519.1bn after-tax loss in H1 2024 amid economic turbulence

Joy Agwunobi 

MTN Nigeria has revealed that the first half of 2024 saw the telecommunications giant suffer a  loss after tax of N519.1 billion, a figure representing a worrisome climb from the previous year’s loss of N85 billion for the same period. The company attributed the loss to the combination of record-high inflation and a naira struggling against the pressures of devaluation, creating a severely adverse environment that threatens the stability and profitability of businesses across the country.

In spite of the challenges posed by a weakening economy, MTN Nigeria was able to secure a revenue growth of N1.53 trillion. However, this increase was overshadowed by the surge in cost of sales, which grew 33 percent to N252 billion, along with operating expenses that spiked to N738 billion.

In a statement released on the Nigerian Exchange (NGX) Limited, MTN Nigeria dwelled on the primary factors that drove the company to its fiscal brink. The telecommunications giant, burdened by dollar-related obligations such as rent and financing costs, found itself cornered by a naira in free fall and foreign exchange volatility exacerbated by government policies. This predicament, the company explained, was compounded by an inflation rate that has reached an 18-year high and an interest rate hike of 800 basis points.

MTN stated, “The depreciation of the naira between December 2023 and June 2024 resulted in substantially higher net forex losses of N887.7 billion, compared to N454.7 billion in H1 2023, due to the revaluation of foreign currency-denominated obligations. This contributed to a loss after tax of N519.1 billion, up from a restated loss of N85.6 billion in H1 2023. Consequently, the company reported negative retained earnings of N727.2 billion and a negative shareholders’ equity of N577.7 billion.”

While the financial performance seemed to be shifting beneath MTN Nigeria’s feet, the company’s operational performance displayed remarkable resilience. Despite the company’s decision to bar 8.6 million subscribers in the first half of 2024, the telecommunications giant still managed to grow its customer base to 79.4 million users. The company harnessed its strong subscriber base to drive impressive growth in its data revenue, which soared to N727 billion in the six-month period, while its voice revenue remained strong at N632 billion despite the broader economic headwinds.

In addition, mobile money wallets saw significant growth, increasing to 5.5 million from 3.1 million in the first half of 2023. Active mobile money (MoMo PSB) wallets grew by 73.9 percent to 5.5 million, while the company’s fintech arm experienced an 11 percent revenue growth.

Commenting on the financial results, Karl Toriola, CEO of MTN Nigeria, acknowledged the challenging macroeconomic conditions in Nigeria. “The macroeconomic conditions in Nigeria have been challenging during the period. Overall, these headwinds put pressure on consumers and the cost of doing business in the country. This includes, for MTN Nigeria, additional forex losses, leading to pressure on our period-end negative capital position,” Toriola stated.

Despite these challenges, Toriola emphasised the company’s commitment to mitigating these pressures and accelerating business growth. “Notwithstanding, we continue to prioritise initiatives to mitigate these pressures while accelerating the growth of our business, and we remain encouraged by the robust momentum in the underlying performance of our commercial operations,” he added.