MTN Group Ltd., Africa’s largest telecommunications operator, has issued a warning regarding a significant decline in its full-year profit.
The company expects a potential drop of up to 80% due to the sharp devaluation of the Nigerian naira.
This currency fluctuation has impacted MTN’s financial performance, particularly affecting its largest unit, MTN Nigeria.
The Naira’s Plunge and Its Consequences
The Nigerian naira has experienced a 70% depreciation against the dollar since June, resulting in substantial challenges for businesses operating in the country.
Approximately one-third of MTN’s profit is derived from its operations in Nigeria, making it a critical market for the company.
MTN Group’s headline earnings per share, one of the primary profit measures, is expected to fall between 80% and 60% for the year ending December 31, compared to the previous year’s figure of 1,154 cents.
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The devaluation of the naira has led to higher operating costs, increased net finance expenses, and foreign exchange losses for MTN Nigeria.
Impact on MTN Nigeria
In a separate statement, MTN Nigeria reported a loss after tax of 137 billion naira (approximately $84.8 million) due to the currency devaluation.
This contrasts sharply with the restated profit after tax of 348.7 billion naira in 2022.
The foreign exchange losses in MTN Nigeria’s financials are estimated to be 593 cents (compared to 52 cents in 2022) in the group’s overall results.
Nigeria‘s supersized interest rate hike failed to stem the naira’s decline, with the West African country’s currency slumping to a fresh record against the dollar on the official market and its eurobonds gave up ground.
