Nigeria’s biggest network service providers and the new entrant in the industry are experiencing major setbacks driven by inflation and the naira floating policy of the Central Bank which has cut deep into their profit.
Analysis by THE WHISTLER showed that the first nine months of 2023 came with numerous political and economic headwinds which led to a loss after tax for Airtel of 103.8 per cent and 45 per cent slide in MTN Nigeria Communication Plc’s Profit After Tax (PAT), while the new entrants, BRICLINKS Africa Plc had 296.3 per cent fall in PAT.
Driven by the naira depreciation, MTN recorded a net foreign exchange loss of N232.8bn between January 2023 to September 2023, while Airtel posted a foreign exchange loss of $317m (N238.45bn at N752.2/$) in September, representing a cumulative N471.4bn.
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The administration of President Bola Ahmed Tinubu floated the naira and unified the foreign exchange market along the Investors’ and Exporters’ window to open up the country for investment.
The naira traded from around N466/$ to N750 and over N900 per dollar at a point, thereby defeating the expectation of the Central Bank of Nigeria. The CBN believes that the fair value of the naira is around N650 to N750/$.
Since the policy, THE WHISTLER findings showed that network providers have seen their profit eroded despite posting an improvement in revenue to a cumulative N3.74trn in September 2023 from N3.38trn in September 2022.
MTN Communications Plc is Nigeria’s second biggest telco by market capitalization and subscriber base.
It disclosed in its third quarter 2023 interim report that revenue rose 21.7 per cent to N1.77trn from N1.45trn recorded last year.
Despite the surge in MTN revenue, the company recorded 45.2 per cent depreciation in profit from N270.3bn in 2022 to N148bn in September 2023. Consequently, diluted earnings per share fell from N12.89 per share in September 2022 to N7.06 per share in September 2023.
MTN revealed that the “business was significantly affected by a major deterioration in foreign exchange (FX) rates” adding that there is an “ongoing effort to redenominate some categories of these foreign denominated expenditure to the local currency.”
Airtel Africa, Nigeria’s biggest telco by market capitalisation declared a slight revenue growth of N1.97trn from the N1.92trn recorded in September last year.
Airtel said the loss is “Driven largely by a foreign exchange loss of $471m recorded in finance cost before tax and $317m after tax because of the devaluation of the Nigerian naira in June 2023. This impact has been classified as an exceptional item.”
Airtel’s basic earnings per share dropped from $7.9 to a loss of -$1.5 per share.
BRICLINKS Africa which is a new bride and licensed by the Nigerian Communications Commission, NCC, to operate as a Mobile Virtual Network Operator (MVNO) was hit by the economic crisis.
BRICLINKS books show a decline in revenue from N107.3m to N72.75m in September 2023. The telco’s profit also declined from N5.3bn recorded last year to N1.3bn in 2023.