MTN assures commitment to Nigerians as company records N740bn forex loss

MTN Nigeria CEO Karl Toriola
Karl Toriola

MTN Nigeria Plc has assured that it remains committed to satisfying both customers and shareholders in spite of the N740 billion forex loss it suffered in the financial year ended December 31, 2023.

In the audited results released on Friday, the company recorded a loss before tax of N177.8bn compared to a pre-tax profit of N518.8bn in the previous year.

This significant shift was attributed to the telecom operator’s substantial forex loss of N740.4bn, a consequence of the steep devaluation of the naira in 2023.

The financial downturn, as indicated by MTN, resulted in a reported loss after tax amounting to N137bn. This sharp contrast was evident compared to the restated Profit After Tax (PAT) of N348.7bn reported in 2022.

The telco stated that the repercussions of this financial decline extended to negative retained earnings and shareholders’ equity, reported at N208bn and N40.8bn, respectively, as of December 2023.

On 14 June 2023, the Central Bank of Nigeria announced changes in the Nigerian forex operations, which required the immediate collapse of all segments of the market into the investor and exporter window and reintroduced the ‘willing buyer, willing seller’ model to improve forex liquidity.

This led to a 96.7 percent movement in the exchange rate since the announcement of N907/US$ (NAFEM rate) at the end of December 2023 as the market seeks an equilibrium level.

MTN said this significant movement in the exchange rate impacted its operations especially its operating expenses and net finance costs.

The inflation rate increased throughout the year, reaching 28.9 percent in December 2023 – the highest reading in 18 years, with an average rate of 24.5 percent.

CEO of MTN Nigeria Karl Toriola said this was further exacerbated by higher fuel prices, arising from the removal of the fuel subsidy in May 2023, with the average prices of diesel and petrol up by 66.4% and 257.1 percent in 2023 to N1,416.8/litre and N600/litre, respectively.

To mitigate the effects of these headwinds on its operations, Mr Toriola said the company continued to invest in network infrastructure – with a disciplined focus on value-based capital allocation and efficiencies – to enhance capacity and expand coverage.

Speaking on some positive results, Toriola said the company added 4 million subscribers in 2023, and data subscribers increased by over 5 million.

“Looking forward, we remain focused on sustaining our commercial momentum and accelerating our service revenue growth, improving the profitablity of the business and strengthening the balance sheet,” he said.

In spite of the declared loss, “the MTN business fundamentals are still strong with a N2.5 trillion top line revenue, up 23%; N1.2 trillion in EBITDA, up 12% and N632 billion in free cash flow, up 12%,” a source in the company said, quoting figures from the audited report.