MTN Nigeria Loses ₦392.7 Billion in Q1 Due to Inflation and Weak Naira

MTN Nigeria (MTNN), a dominant player in Nigeria’s mobile network industry, has reported a massive loss of ₦392.7 billion for the first quarter (Q1) of 2024. This staggering loss is a direct consequence of two major economic challenges: rising inflation and a weakening Nigerian Naira (₦).

The company also reported a staggering net foreign exchange loss of N656.3 billion for the first quarter of 2024, as a direct result of the naira’s continued depreciation. This loss has had a significant impact on the company’s balance sheet, which has already been ravaged by the ongoing depreciation of the naira.

MTN has now incurred a total foreign exchange loss of N1.396 trillion since 2023, which is the largest amount on record for any publicly quoted company in Nigeria.

While the company did experience growth in both subscribers and service revenue, these gains were ultimately overshadowed by the broader economic difficulties.

The devaluation of the Naira against the US Dollar (USD) resulted in a substantial foreign exchange loss for MTN Nigeria. The crux of the issue lies in the company’s dollar-denominated liabilities – they owe money in USD. As the Naira weakens, it takes a significantly larger amount of Naira to pay back the same amount of USD debt.

Faced with these financial hurdles, MTN Nigeria is taking proactive steps to manage its finances more effectively. They are actively working to reduce their dollar-denominated debt and are currently renegotiating expensive tower lease contracts. These efforts aim to bring their expenses more in line with their Naira earnings, creating a more sustainable financial model.

Subscribers and Revenue on the Rise

Despite the significant Q1 loss, there are some positive aspects to MTN Nigeria’s performance. The company saw a 1.3% increase in its total subscriber base, reaching 77.7 million. Additionally, service revenue grew by an impressive 32%, reaching ₦747.3 billion. These figures indicate that MTN Nigeria’s core business operations remain healthy.

While the Q1 loss is undoubtedly a setback, MTN Nigeria’s leadership remains optimistic about the future. CEO Karl Toriola highlighted the company’s continued growth in subscribers and service revenue. He also emphasized that MTN Nigeria has secured crucial support from lenders to navigate their current financial situation.

MTN Nigeria’s story in Q1 2024 serves as a microcosm of the challenges faced by many businesses in Nigeria due to inflation and currency fluctuations. The company’s loss underscores the impact of these economic factors. However, their efforts to adapt and secure financial support offer a glimmer of hope for a future turnaround.