In a significant development in the Nigerian telecommunications sector, MTN Nigeria Plc, one of the leading telecom operators in the country, has reported a staggering loss before tax of N177.8 billion for the financial year ended December 31, 2023. This marks a stark contrast from the pre-tax profit of N518.8 billion reported in the previous year, indicating the company’s first-ever loss since its inception as a quoted company in Nigeria.
The loss, attributed primarily to a massive foreign currency loss of N740 billion, has resulted in a complete wipe-out of shareholders’ funds. MTN Nigeria cited operational changes in the Nigerian foreign exchange market, particularly the abolishment of the segmented/parallel structure announced by the Central Bank of Nigeria (CBN) in June 2023, as a significant factor contributing to the substantial loss.
According to MTN, the company used an official exchange rate of N907.11/$1 as of December 31, 2023. However, concerns arise regarding the potential widening of losses if the current exchange rate between the naira and dollar persists.
Key financial highlights for the year 2023 include:
- Revenue: N2.469 trillion, reflecting a 22.69% increase year-over-year.
- Operating Profit: N773.660 billion, up by 5.38% compared to the previous year.
- Finance Income: N25.815 billion, showing an 87.50% increase year-over-year.
- Finance Cost: N236.927 billion, representing a significant rise of 60.86% compared to the previous year.
- Net FX Loss: N740.434 billion, skyrocketing by 804.93% year-over-year.
- Loss after tax: N137.021 billion, a substantial decrease of 139.29% compared to the previous year.
- Earnings per share: -N6.38, a decline of 138.07% year-over-year.
- Total Borrowing: N1.177 trillion, indicating a 70.69% increase compared to the previous year.
Additionally, MTN Nigeria reported growth in its subscriber base, with total subscribers increasing by 5.3% to 79.7 million. Active data users and active mobile money (MoMo PSB) wallets also witnessed significant increases.
The company’s Earnings before interest, tax, depreciation, and amortization (EBITDA) grew by 12.3% to N1.2 trillion, albeit with a decrease in EBITDA margin by 4.5 percentage points to 48.7%.
Furthermore, the net loss for the year has resulted in a depletion of retained earnings and shareholders’ funds, reaching negative N208.0 billion and N40.8 billion, respectively. This has led MTN Nigeria to communicate that it will not propose a final dividend payment for the year ended December 31, 2023, following the substantial loss incurred.
In light of these financial challenges, MTN Nigeria Communications Plc (MTNN) experienced a year-to-date loss of 15.6% for shareholders, with a 19% decrease in the stock’s value from February 1st to the current date.
The company attributed these losses to various factors, including rising inflation, currency devaluation, foreign exchange shortages, geopolitical disruptions, and cash shortages, particularly in the first quarter of 2023.
Despite the significant loss incurred, MTN Nigeria emphasized its strong free cash flow generation, which increased by 11.6% year-over-year to N631.6 billion.
