MTN Suffers Setback As CBN’s Naira Devaluation Leads Company To N137bn Net Loss In 2023

Nigeria’s biggest network service provider, MTN Communication Plc posted a net loss of N137bn in 2023 after the naira redesign and currency devaluation policy of the Central Bank of Nigeria inflated the company’s net finance loss.

The loss comes despite a 22.4 per cent improvement in revenue from voice, data and other services which surged from N2trn in 2022 to N2.45trn in 2023.

In 2022, MTN’s net profit was N348.7bn but declined 139 per cent last year.

The company came under pressure when the CBN redesigned the naira and later floated the currency in June. When the country floated the naira in June last year, by December, the naira devalued by 96 per cent.

The naira fell from N461.1 per dollar in December 2022 to N907.1 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) rate) in December 2023.

The company described the devaluation of the currency as “unfavourable movement in the exchange rate”.

With the net loss for the year, MTN admitted that the loss has resulted in a depletion of its retained earnings and shareholders’ fund to negative N208.0bn and N40.8bn, respectively.

The books show that MTN Nigeria’s operations were exposed to foreign currency volatility on its operating and capital expenditure.

The most significant of the exposures relates to the tower lease costs, which comprised the bulk of the 45-50 per cent foreign currency exposure in the company’s operating expenses in 2023.

From N600bn in 2022, MTN’s operating expenses rose to N8860.3bn in 2023.

The books reveal, “EBITDA, however, came under severe pressure and recorded a slower growth of 12.3 per cent. This was primarily due to the effects of the naira devaluation in the year, exacerbated by higher energy costs and general inflation.

“EBITDA was also affected by the introduction of VAT on leases (in Q4), as well as a provision relating to the Tax Appeal Tribunal (TAT) decision on the FIRS VAT assessment (also taken in Q4).”

MTN’s net finance costs increased by 341.9 per cent to N951.5bn due to increased borrowings, higher interest rates, and a significant devaluation of the naira.

“We anticipate a challenging 2024 as we tackle the complexity and ongoing effects of high inflation and elevated forex volatility on our operations,” MTN said.

Following the poor performance, the MTN board failed to declare a final dividend for 2023.