How MTN Nigeria’s N177.8bn Loss Allegedly Erases Shareholders’ Funds

…Alleged CBN’s Abolition Of Segmented/Parallel Structure As Primary Driver Of Losses

LAGOS, NIGERIA – The financial woes of MTN Nigeria have deepened with a reported loss before tax of N177.8 billion, a stark contrast to the pre-tax profit of N518.8 billion recorded a year earlier.

The telecommunications giant attributed this significant loss to a staggering foreign exchange loss, soaring from N81 billion in 2022 to a whopping N740 billion.

In its 2023 financial report, MTN pointed to operational adjustments in Nigeria’s foreign exchange market, particularly the abolition of the segmented/parallel structure announced by the Central Bank of Nigeria in June 2023, as a primary driver of the losses.

The company’s financial statement revealed a mixed performance: while revenue surged to N2.469 trillion compared to N2.012 trillion in 2022 and operating profit grew to N773.660 billion in 2023 from N734.164 billion in 2022, there was a considerable increase in finance income and costs. Net forex loss ballooned to N740.434 billion, resulting in a negative profit after tax of -N137.021 billion and earnings per share of -N6.38.

Despite subscriber growth and other positive indicators, the challenging operating environment in 2023, marked by rising inflation, currency devaluation, and foreign exchange shortages, took a toll on MTN Nigeria’s financial health.

The company cited geopolitical disruptions and cash shortages in Q1, compounded by naira redesigns, as contributing factors to its struggles.

MTN Nigeria highlighted the adverse effects of inflation, fuel price hikes, and changes in the foreign exchange management system, which substantially increased business costs, including tower leases.

The telecom giant faces significant challenges as it navigates through a turbulent economic landscape, grappling with inflationary pressures and currency fluctuations that threaten its bottom line and shareholders’ interests.