MTN Nigeria Plc has announced a staggering loss before tax of N177.8 billion, a stark contrast to the pre-tax profit of N518.8 billion recorded the previous year.
This substantial loss has led to a complete wipe-out of shareholders’ funds. The company attributed this to a significant foreign currency loss amounting to N740 billion, a drastic increase from the N81 billion reported in 2022. Notably, this marks the company’s first-ever loss since its listing in Nigeria.
According to MTN, the loss can be primarily attributed to operational adjustments within the Nigerian foreign exchange market, particularly the elimination of the segmented/parallel structure as announced by the Central Bank of Nigeria (CBN) in June 2023.
The company utilized an official exchange rate of N907.11/$1 as of December 31, 2023, hinting that the losses could potentially widen if the current exchange rate between the naira and dollar persists until the end of March, when its Q1 results are due for publication.
In a statement, MTN expressed the challenges encountered amidst a tumultuous operating environment in 2023.
Rising inflation, currency devaluation, and foreign exchange shortages, exacerbated by geopolitical disruptions and cash shortages in Q1 due to a redesign of the naira, posed severe headwinds for both customers and business operations.
Throughout the year, inflation surged, reaching 28.9 per cent in December 2023, the highest reading in 18 years, with an average rate of 24.5 per cent. Additionally, the removal of fuel subsidies in May 2023 led to substantial increases in fuel prices, with diesel and petrol prices soaring by 66.4 per cent and 257.1 per cent respectively, in 2023.
Furthermore, the CBN’s adoption of a more liberal foreign exchange management system in June 2023, along with the reintroduction of the ‘willing buyer, willing seller’ model, resulted in a 96.7 per cent unfavourable movement in the exchange rate against the US dollar, from N461.1/US$ in December 2022 to N907.1/US$ (Nigerian Autonomous Foreign Exchange Market (NAFEM) rate) in December 2023.
This significant shift substantially increased the costs associated with doing business in Nigeria, particularly impacting MTN Nigeria’s expenses related to tower leases.
