MTN Nigeria’s nine-month loss soars amid naira devaluation

MTN Nigeria is struggling to contain its current financial challenge as its net loss for the year to September quickened by 3,335.4 per cent, worsening its negative asset position.

Foreign exchange loss for the local unit of Africa’s largest telecommunications company sped up 90.8 per cent to N904.9 billion, compared to a year ago, a period in which Nigeria sharply devalued its currency.

That caused the foreign currency exposure of the wireless operator – borrowings, trade & payables, derivatives, lease liabilities among others – to soar in naira terms, its unaudited financial statements for the period show.

“The further depreciation of the naira arising from the revaluation of foreign currency denominated obligations resulted in a loss after tax for the 9-month period of N514.9 billion (2023: 15.0 billion loss, restated),” CEO Karl Toriola said in an earnings release document.

“This resulted in negative retained earnings and shareholders’ equity of N723.0 billion (December 2023: negative N208.0 billion) and N573.6 billion (December 2023: negative N40.8 billion), respectively,” he added.

The shareholder fund of MTN Nigeria turned red last December after liabilities exceeded assets by N40.8 billion. That is now much more elevated, with the accumulated quarterly losses that followed shooting its negative equity to N573.6 billion at the end of September.

Short-term financial obligations that are due and need to be settled urgently total N2.1 trillion. More than 57 per cent of that is trade & payables including payment due for security deposits and for withholding and value-added tax.

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Turnover rose by a third to N2.4 trillion, mostly driven by appreciable growth in data revenue and partly by voice revenue.

The corporation said it spent 27.8 per cent less on capital projects during the period, helping strengthen its positive free cash flow by 21.9 per cent. Loss before tax rose to N713.6 billion, up from N9.8 billion.