MTN Reports Half-Year Loss Amidst Naira Devaluation and Operational Challenges
Africa’s largest telecom operator, MTN, has announced a significant loss for the first half of the year, attributing the downturn to the devaluation of the Nigerian naira and other operational challenges. The company, which boasts over 288 million customers across 18 African markets, revealed the loss in its financial report for the six-month period ending June 30.
The company’s financial performance contrasted sharply with the same period last year when it reported restated headline earnings. MTN Group’s Chief Executive Officer, Ralph Mupita, acknowledged the difficulties, stating, “Although the underlying commercial momentum and strategy execution were solid in the earlier period, macro headwinds impacted operating results.”
Mupita highlighted that the devaluation of the naira against the U.S. dollar had a profound effect on MTN’s financial health. “The further devaluation in the Naira against the U.S. dollar; the translation impact on reporting currency (rands) and the ongoing conflict in some African countries like Sudan had the most significant impact on reported results,” he explained.
The financial report indicated that the company’s service revenue dropped by 20.8 percent, from 107.7 billion rand to 85.3 billion rand. However, in constant currency terms, which exclude device and SIM card revenue, MTN’s group service revenue rose by 12.1 percent, showcasing the underlying strength in its operations.
Interestingly, MTN’s service revenue from its home market, South Africa, outpaced that of Nigeria, which is traditionally its largest market by revenue. While South Africa saw a marginal growth of 3.3 percent, bringing its revenue to 21.1 billion rand, Nigeria experienced a steep decline of 52.9 percent, resulting in revenue of 20.5 billion rand. Nonetheless, when adjusted for constant currency, Nigeria’s revenue actually grew by 32.4 percent, underscoring the impact of currency fluctuations on the reported figures.
Despite the challenges, MTN remains optimistic about its financial outlook. The company’s board has projected a minimum ordinary final dividend of 330 cents per share for the 2024 financial year, signaling confidence in its long-term strategy.
MTN’s half-year loss serves as a stark reminder of the vulnerabilities businesses face in volatile markets, particularly those influenced by currency devaluations and geopolitical instability. As the company navigates these challenges, it remains to be seen how it will adjust its strategies to mitigate future risks.
