MTN posts first loss in eight years on currency devaluations
TLDR
- MTN Group Ltd., Africa's largest wireless carrier, reported a loss of 7.39 billion rand for H1 2024, its first loss since 2016, primarily due to Nigerian naira devaluation impacting key market income.
- Despite the financial setback, MTN increased its customer base by 0.8% to 288 million, amid challenges like exiting Afghanistan and declining users in conflict-ridden Sudan.
- The loss in 2024 echoes MTN's previous financial struggle in 2016 after a substantial fine imposed by the Nigerian government.
MTN Group, Africa’s largest wireless carrier by revenue, posted a loss of 7.39 billion rand ($414.7 million) for the first half of 2024, marking its first loss since 2016. This loss contrasts sharply with a profit of 4.14 billion rand recorded in the same period last year.
The financial setback is primarily due to the devaluation of the Nigerian naira, which significantly reduced income from one of MTN’s key markets. Currency devaluations in other regions, including South Sudan, also further impacted earnings.
Despite these challenges, MTN managed to increase its total customer base by 0.8% to 288 million. This growth occurred even as the company exited Afghanistan and faced a decline in users due to the ongoing conflict in Sudan. The last time MTN reported a loss was in 2016, following a hefty fine of over $1 billion imposed by the Nigerian government.
Key Takeaways
Since President Bola Tinubu took office in May 2023 and began implementing foreign exchange and economic reforms, the Nigerian naira has plummeted by more than 70% against the dollar. This significant devaluation has heavily impacted MTN Group, which relies on Nigeria for about a third of its earnings, with around 77 million customers in the country. In response to these challenges, MTN is considering exiting additional markets, including its unit in Guinea Conakry, and is actively engaged in talks regarding this potential move. The company also plans to reduce its stake in its Nigerian operations to as low as 65% by selling shares to local investors, as part of its broader strategy to adapt to the changing economic landscape.
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