MTN Group expects 80% fall in full-year profit over naira devaluation
TLDR
- MTN Group, Africa's largest telecommunications operator, issues warning of potential 80% decline in full-year profit due to Nigerian naira devaluation.
- MTN Nigeria reports a net forex loss of 740.4 billion naira ($569.54 million), leading to a 341.9% increase in net finance costs.
- Headline earnings per share for MTN could drop between 60% and 80% compared to the previous year, signaling significant financial impacts.
MTN Group, Africa's largest telecommunications operator, issued a warning on Friday, indicating a potential decline of up to 80% in full-year profit. This significant drop is attributed to the sharp devaluation of the Nigerian naira, which resulted in its largest unit, MTN Nigeria, reporting a loss.
In 2023, MTN Nigeria recorded a net forex loss of 740.4 billion naira, equivalent to $569.54 million. This substantial loss contributed to a significant increase in its net finance costs, soaring by 341.9% to reach 951.5 billion naira.
Headquartered in South Africa, MTN stated that its headline earnings per share, a key profitability metric, could plummet between 60% and 80% for the year ending December 31, compared to the previous year's figure of 1,154 cents.
Key Takeaways
Nigeria’s currency crisis, which stems from a scarcity of dollars, has resulted in an exodus of international businesses that need to repatriate earnings from one of Africa’s biggest economies. The devaluation of the Nigerian naira, prompted by new forex regulations adopted by Nigeria's central bank in June, has seen the exchange rate depreciate by approximately 96.7% by the end of December, reaching 907.1 naira per dollar. MTN highlighted that this devaluation led to increased operating and net finance costs, as well as foreign exchange losses for MTN Nigeria, which are expected to impact the group's overall financial performance. In morning trade, MTN Group shares experienced a 7% decline, which later reduced to stand 1.20% lower by 12:36 GMT. Despite this, the group reaffirmed its intention to declare a dividend consistent with its guidance of a minimum of 330 cents per share. Conversely, shares in MTN Nigeria plummeted by 9.96%.
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