MTN Faces Profit Decline Due to Nigerian Naira Devaluation

MTN’s annual profit has sharply dropped due to Nigeria’s naira devaluation, with headline earnings per share falling to 98 cents from 315 cents. The company’s pre-tax losses in Nigeria exceeded 200%, totaling ₦550.3 billion. Additionally, operational challenges in Sudan were noted. MTN did, however, declare an increased final dividend and showed revenue growth in constant currency terms.

MTN, headquartered in South Africa, reported a significant decline in profits due to the devaluation of the Nigerian naira. The company disclosed that its headline earnings per share (HEPS) fell to 98 cents for the fiscal year ending December 31, 2023, a marked decrease from 315 cents in the previous year.

The context for this decrease is Nigeria’s ongoing dollar shortages, which have necessitated the devaluation of the naira. This government action, intended to stabilize the currency and attract foreign investment, coincided with elevated inflation and interest rates, leading to increased operational costs. Consequently, MTN Nigeria’s pre-tax loss expanded over 200%, reaching ₦550.3 billion (approximately $355.76 million).

In addition to challenges in Nigeria, the group’s performance was also adversely affected by persistent armed conflict in Sudan, as noted by Group CEO Ralph Mupita. Despite these setbacks, MTN boasts a customer base of 291 million across 16 African markets.

The group experienced a 15% decline in service revenue, totaling R177.8 billion ($9.78 billion). However, when accounting for constant currency fluctuations, service revenue exhibited a positive growth of 14%. In light of these results, MTN declared a final dividend of 345 cents per share, an increase from the previous year’s dividend of 330 cents.

In summary, MTN’s financial performance has been severely impacted by the devaluation of the Nigerian naira, resulting in a sharp decline in earnings and significant pre-tax losses in Nigeria. Furthermore, ongoing conflict in Sudan has compounded the company’s challenges. Nevertheless, despite these adversities, MTN managed to declare an increased dividend and recorded a growth in service revenue when adjusted for currency fluctuations.

Original Source: www.bizcommunity.com