March 01, (THEWILL) – MTN Nigeria Plc suffered foreign exchange losses amounting to N740 billion in FY 2023, against N81 billion reported in the previous year 2022.
This resulted to a loss before tax of N177.8 billion compared to a pre-tax profit of N518.8 billion a year earlier.
This is contained in the company’s unaudited financial statements filed with the Nigerian Exchange on Friday.
This is the company’s first-ever loss since it became a quoted company in Nigeria in May 2029.
According to MTN, “the loss was significantly due to operational changes to the Nigerian Foreign exchange market, including the abolishment of the segmented/parallel structure announced by CBN in June 2023.”
MTN also stated that it has used an official (NAFEM) exchange rate of N907.11/$1 as of 31 December 2023 suggesting loss could be wider if the current exchange rate between the naira and dollar persists by the end of March when it publishes its Q1 results.
Notwithstanding the scandalous losses, the foremost telecom firm recorded a revenue growth of 22.69 percent year-on=year to N2.46 trillion from N2 01 trillion in the previous year.
Operating Profit rose to N773.66 billion against N734.16 billion in 2022, an increase of 5.38 percent.
Finance Income rose by 87.5 percent to N25.81 billion against N13.768 billion recorded in the previous year, as it suffered a 60.86 percent finance cost which climbed to N236.92 billion from N147.28 billion year-on-year.
The company has announced that due to the substantial currency devaluation and its repercussions on retained earnings, the Directors will not propose a final dividend payment, given the resultant loss for the year ended December 31, 2023.
MTN Nigeria had on July 27, 2023, approved interim dividends of N117.48 billion for the year ending December 31, 2023, amounting to N5.60 kobo per ordinary share.
In a statement, the company said, “2023 witnessed a very challenging operating environment characterised by rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in Q1 arising from a redesign of the naira.
“These factors created severe headwinds for our customers and our business during the year. The inflation rate increased throughout the year, reaching 28.9% in December 2023 – the highest reading in 18 years – with an average rate of 24.5%.
“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% in 2023 to N1,416.8/litre and N600/litre, respectively. In June 2023, the Central Bank of Nigeria (CBN) adopted a more liberal foreign exchange management system and reintroduced the ‘willing buyer, willing seller’ model.
“This has resulted in a 96.7% 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 development contribute meaningfully to the upward pressure on the cost of doing business in Nigeria, and for MTN Nigeria in particular, significantly increased the costs in relation to our tower leases.”
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
