MTN Nigeria has continued to drive strong growth across its service offering that have shifted beyond mobile voice, insights from Q1 2024 results of the nation’s largest telco have shown.
MTN Nigeria, which released its unaudited financial report for the quarter ending March 31, 2024 on Monday, is confident about surviving the toughening economic weather in the country.
The report reveals a significant loss for the company, signalling ongoing difficulties amidst Nigeria’s challenging economy.
Karl Toriola, CEO of MTN Nigeria, addressed the challenging operating environment, citing factors such as rising inflation and currency depreciation as significant contributors to the company’s financial struggles.
In terms of financial performance, MTN Nigeria experienced a notable decline, the company made more money overall but inflation and a weak naira led to big losses. Despite a 32.0% increase in service revenue, the company faced a loss after tax of N392.7 billion.
Karl Toriola, CEO of MTN Nigeria, addressed the challenging operating environment, citing factors such as rising inflation and currency depreciation as significant contributors to the company’s financial struggles.
“The operating environment in the first quarter remained very challenging,” said Toriola. “With rising inflation and continued naira depreciation off an already low base. The naira depreciated to an all-time low of N1,627/US$ at the Nigerian Autonomous Foreign Exchange Market (NAFEM) in March from N907/US$ at the end of December 2023, before moderating to N1,309/US$ by the end of the quarter. Additionally, the inflation rate maintained an upward trajectory, rising to 33.2% in March, with an average rate of 31.6% in the quarter.”
MTN Nigeria also revealed that the company is considering strategic options to manage its tower lease contracts. “If successful, these negotiations could result in improvements that will help us to mitigate macro risks impacting our business, including FX. This would supplement our aforementioned initiatives to accelerate the recovery profile of our earnings and restore our net asset position faster,” Toriola said.
According to the MTN Nigeria CEO, “to curb inflation, the Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR) by 4pp to 22.75%, which has driven up funding costs. These factors have caused significant difficulties for businesses operating in Nigeria, including MTN Nigeria, putting additional pressure on consumers, the cost of doing business and further foreign exchange (forex) losses.”
Looking ahead, MTN Nigeria is pursuing initiatives to address the negative capital position and restore profitability. These initiatives include seeking regulated tariff increases, implementing margin recovery strategies, optimizing capital expenditure, and reducing exposure to US dollar volatility.
MTN Nigeria also revealed that the company is considering strategic options to manage its tower lease contracts. “If successful, these negotiations could result in improvements that will help us to mitigate macro risks impacting our business, including FX. This would supplement our aforementioned initiatives to accelerate the recovery profile of our earnings and restore our net asset position faster,” Toriola said.
According to Toriola, “we will continue to evaluate the conditions and developments in our operating environment and evolve our approach to address the negative capital position as required. We have obtained the necessary accommodations from our lenders, as pertains to any impacts on our loan agreements in regard to the restatement of our financial statements. We also have in place accommodations relating to any potential breaches in our covenants occasioned by the major currency devaluation and the resultant negative net asset position. This will enable us to continue executing our strategy and implement the interventions we have outlined.”
MTN Nigeria: Insights from Q1 2024 results:
– Despite the financial setback, total subscribers reached 77.7 million, marking a slight increase of 1.3%. However, this growth was overshadowed by the implementation of the NIN-SIM directive, resulting in a decline of two million subscribers compared to the previous quarter.
– Active data users rose by 8.0% to 44.5 million, while active mobile money wallets increased to 4.8 million, indicating a growth of 48.7%, compared to Q1 2023 figures of 3.2 million. However, these figures are down compared to the Q4 2023 figures (5.3 million) due to the NIN requirement for KYC validation.
– Service revenue surged by 32.0% to N747.3 billion, reflecting the company’s continued efforts to meet customer demands and expand its offerings. However, EBITDA faced a 1.9% decline, contributing to the overall financial loss experienced by MTN Nigeria in Q1 2024.
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