MTN Nigeria records largest half-year loss ever

MTN Nigeria (MTNN), the local subsidiary of Africa’s largest mobile network operator MTN Plc, reported a sixfold surge in loss after tax to N519 billion in the first half of the year.

According to its earnings report issued on Wednesday, this represents its biggest half-year loss on record.

The loss for the six-month period is already roughly three times the loss it recorded for the whole of last year, complicating an ordeal dating back to the period Nigeria’s devaluation of the naira led to a massive foreign exchange loss for the wireless carrier.

Nigeria is MTN Plc’s biggest market, accounting for about one-third of its revenue, meaning the underwhelming performance could have negative implications for the group’s results when they are released.

The country devalued its currency by 31 per cent in January, the second time in eight months, as part of reforms aimed at unifying its official and unofficial exchange rates.

It led the net foreign exchange loss of MTNN up to N887.7 billion from N454.7 billion a year earlier after exchange rate pressures caused foreign-currency obligations like borrowings, trade & other payables and lease liabilities to surge in naira terms.

Revenue climbed 32.8 per cent to N1.5 trillion driven by a sharp uptick in data income, which alone contributed 47.2 per cent of turnover.

Yet, galloping costs eroded a great deal of that, as Nigeria’s inflation rate came close to its highest in almost three decades in the period under review, leaving operating profit 27.7 per cent weaker.

For instance, direct network operating costs more than doubled to N586.7 billion, while other operating expenses grew by 103.3 per cent.

“Despite barring 8.6 million subscribers during H1, in line with the NCC directive, we managed to limit the decline in our base to 280k; resulting in a 2.9% YoY increased in our customers to 79.4 million,” said CEO Karl Toriola.

“The higher general inflation impacted our cost profile and eroded earnings,” he added.

Loss before tax rose to N751.3 billion from N119.4 billion a year ago. MTN Nigeria received a tax credit of N232.2 billion from tax authorities, helping it cut net loss to N519.1 billion.

MTNN’s shareholders’ fund stayed in the red during the period as it did at the end of last year, standing at -N577.7 billion.

Assets at the end of the period totalled N3.3 trillion, while liabilities stood at N3.9 trillion.