MTN’s key Nigerian operation has reported a big loss in its latest financial results as macroeconomic, regulatory, currency and other factors continue to exert huge pressure on the business.
Despite a 28% decline in capital expenditure, MTN Nigeria Communications on Thursday reported profit after tax (adjusted for a net forex loss) of N118.5-billion in the nine months to 30 September 2024, down 59.2% compared to the same period a year ago. With the forex losses included, the operation made a loss after tax of N514.0-billion – a sharp reversal from the profit of N4.1-billion in the same period in 2023.
Ebitda margin – a measure of operating margin calculated using earnings before interest, tax, depreciation and amortisation – slumped by 14.9% percentage points to 36.3%. Concerningly, retained earnings and shareholders’ funds remained in the negative at -N723-billion and -N573.6-billion, respectively. However, positive free cash flow increased by 21.9% to N536.8-billion.
Total subscribers decreased by 0.9% to 77 million, impacted by Sim registration rules, while the number of active MoMo (mobile money) wallets declined by 21.8% to just 2.8 million.
MTN Nigeria CEO Karl Toriola described the results as a “resilient performance despite persistent macroeconomic pressures and regulatory challenges”.
“In the first nine months of 2024, we sustained the growth in our underlying operating performance – underpinned by our resilient business model and operational agility – despite challenging conditions,” he said.
Inflation remains a huge challenge, with the rate of price rises averaging 32.8% in the first nine months of 2024, up from 24.5% in the same period last year. To fight this, Nigeria’s central bank has jacked up interest rates significantly – the monetary policy rate jumped by 8.5 percentage points to 27.25% in the reporting period, resulting in higher funding costs for MTN. It has, however, helped reduce volatility and improve liquidity in the foreign exchange market, the company said.
Mitigation
“The higher inflation and interest rates weighed on consumers’ spending power and impacted business activity. However, we remain focused on enhancing operational efficiency and driving the growth of our commercial operations,” Toriola said.
“Our commercial momentum drove broad-based growth across all revenue segments, demonstrating the underlying strength and resilience of the business. We recorded an increase in service revenue of 33.6%, which was ahead of the average inflation rate in the period. This growth was led by data and supported by voice, fintech and digital services,” he added.
Read: MTN takes MoMo fintech battle to South Africa’s streets
The company said it expects the macroeconomic pressures, including high inflation and foreign exchange volatility, to persist, impacting consumer and business spending. “We remain focused on implementing our strategic initiatives to mitigate the impact on our operations,” Toriola said. It will do this by:
- Prioritising the recovery of its subscriber base, which was impacted by Sim card registration rules; and
- Continuing to engage with regulatory authorities to make tariff adjustments for the “sustainability of the industry and its value chain”.
“We are pleased with the continued structural demand for data, which underpins our exciting growth outlook, provided the industry can achieve a more sustainable tariff framework. To support this traffic growth, we anticipate an increase in our capex deployment, particularly given the substantial progress in reducing the foreign exchange exposure from our trade line obligations.
“Against this backdrop, we remain optimistic of a constructive outcome from industry tariff engagements, which we believe will support the recovery of our profitability and balance sheet profile, as well as the medium and long-term growth of our business,” Toriola said. – © 2024 NewsCentral Media
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