MTN Nigeria Communications Plc recently reported a substantial net loss of N514.9 billion for the nine months ending September 30, 2024. This loss is primarily attributed to the ongoing depreciation of the naira and significant regulatory pressures affecting the telecom giant's performance in recent quarters.
For Q3 2024, MTN posted a modest profit after tax of N4.1 billion. However, the telecom provider’s adjusted Profit After Tax (PAT) decreased by 59.2% year over year to N118.5 billion, largely due to foreign exchange challenges. This follows the company’s previous half-year report, which revealed a loss of N519.1 billion, indicating a slight improvement in Q3 but far from reversing the negative trend.
The subscriber base saw a 0.9% decline, bringing total subscriptions down to 77 million. The decline is partly due to the mandatory National Identification Number (NIN) SIM linkage, which led to the deactivation of many Subscriber Identity Modules (SIMs). However, MTN experienced growth in active data users, which rose by 5.1% to 45.3 million a silver lining in its otherwise challenging period. Meanwhile, the number of active mobile money (MoMo PSB) wallets dropped by 21.8% to 2.8 million, showing a mixed landscape for MTN’s customer engagement metrics.
MTN Nigeria's Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) decreased by 5.3% to N860.2 billion. The EBITDA margin dropped 14.9 percentage points, now sitting at 36.3%. This decline underscores the impact of rising operational costs, currency instability, and a challenging regulatory environment.
CEO Karl Toriola described the results as resilient given the conditions, highlighting the company's ability to adapt despite inflationary pressures, which averaged 32.8% compared to 24.5% last year. The Central Bank of Nigeria (CBN)’s recent hike of the Monetary Policy Rate to 27.25% further impacted MTN’s funding costs.
To stabilize its finances, MTN Nigeria recently launched Series 11 and 12 commercial paper issuances aimed at raising N50 billion under its N250 billion Commercial Paper Issuance Programme. This strategic move is expected to help MTN address immediate working capital needs and mitigate the impact of naira devaluation on its financial position.
The naira's depreciation has been a significant burden for MTN, especially after the Central Bank’s currency floatation in June 2023. The exchange rate surged from N461.1 per dollar in December 2022 to N907.1 by December 2023, sharply impacting the company’s earnings and putting dividend payouts for shareholders at risk.
As MTN navigates the challenging Nigerian market, its focus on resilient operations and strategic capital management is likely to continue. However, with persistent currency pressures and regulatory challenges, MTN will need to balance growth initiatives with cost management strategies to sustain its financial health and protect shareholder value.
This period has underscored the importance of a strong operational backbone and innovative financial strategies for companies operating in volatile markets like Nigeria. MTN’s efforts to stabilize through debt issuance and adapt to regulatory changes may serve as a blueprint for other businesses facing similar economic challenges.