MTN profits tank due to Nigeria currency drop

MTN profits tank due to Nigeria currency drop

MTN Group reported a plunge in profits and highlighted currency volatility in Nigeria and inflation as key challenges to tackle this year and expects those headwinds to persist this year.

In MTN’s annual results presentation, CEO Ralph Mupita (pictured) said the company will be focusing on navigating those two key challenges, as it pushes on with its strategy to cut down costs and accelerate its digital platforms strategy. 

“We think inflation will remain relatively stubborn. But we have been encouraged by inflation, in particular in a market like Ghana, where it's come down. But when we look at Nigeria, we think we are going to see inflation remain elevated [as it will] in some of our key markets. 

“On exchange rates, the Nigerian naira has been volatile, the actual direction of its strengthening or weakening remains relatively uncertain at this particular point in time. We have to plan and operate in Nigeria with a couple of scenarios, having base case stress and short cases so that we can actually run our business within that scenario,” said Mupita.

The CEO did not disclose any concrete plans for MTN Nigeria but said more details will be revealed at an AGM which will be held in Nigeria on April 30. 

Price rises

MTN is also planning to engage with regulators on potential price increases to offset anticipated costs from headwinds. 

“I think it is going to be important for us as we engage with the regulators more broadly around how do we offset some of these costs, which are working their way into network operating costs - with tariff increases, as well as price optimisation,” said Mupita.

Mupita also noted MTN Sudan is proving to be a challenging market due to the fact that it has been in conflict since April 2023, this has impacted the unit’s service revenue in impairments and tax rate. The majority of the MTN Sudan team is in Egypt as “the conflict doesn't enable our team to be based back in the headquarters at Khartoum,” said the chief executive. 

MTN announced plans to exit its Middle Eastern operations namely Yemen, Syria and Afghanistan in 2020. The company announced it completed its exit from Afghanistan completing the first phase of this strategy. 

In its 2023 results, the company reported net profit plunging by 83% year-on-year to ZAR 4 billion (US$221 million). Revenue was up by 6.8% to ZAR221.1 billion.

MTN reported high demand for data and fintech services as the number of active data subscribers increased by 9% to 150 million, which is over half of its 295 million total customers. 

Active accounts on its mobile money platform stood at 72 million up 5% year-on-year and the value of transactions across all fintech services was US$272 billion. This growth was due to upgraded service in payments, banktech and remittance solutions.  

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