MTN Nigeria Charts Path to Financial Recovery

MTN Nigeria has unveiled a robust five-point strategy aimed at tackling its “negative asset position” in its primary market. This strategic roadmap was revealed to investors at an extraordinary general meeting held in Lagos, coinciding with the release of MTN Nigeria’s first-quarter 2024 update.

MTN Nigeria Charts Path to Financial Recovery
MTN Nigeria Charts Path to Financial Recovery

The update highlighted a further decline in retained earnings compared to the previous year-end report, underscoring the ongoing challenges faced by the telecommunications giant.

Persisting macroeconomic headwinds, including rampant inflation and currency devaluation, continued to impede MTN Nigeria’s progress in the first quarter of 2024. The company reported substantial losses after tax amounting to ₦392.7 billion (R5.4 billion) for the quarter, with EBITDA down 1.9% year-on-year to ₦297 billion (R4.1 billion).

In response to these challenges, MTN Nigeria announced plans to engage regulators in discussions aimed at securing industry-wide tariff adjustments to mitigate the adverse effects of the challenging market conditions.

According to Uto Ukpanah, MTN Nigeria’s company secretary, “Appropriate tariff increases will be necessary to support continued investment and the long-term sustainability of the industry.”

The recovery strategy encompasses initiatives focused on driving margin recovery, including enhancing revenue growth and operational efficiency.

Optimizing Capital Expenditure

Revenue growth, which surged by 32.5% year-on-year to ₦753 billion (R9.9 billion) in the first quarter of 2024, is on a positive trajectory. Additionally, cost reduction measures and an expense efficiency program are expected to bolster operational efficiency and financial performance.

Furthermore, MTN Nigeria aims to optimize capital expenditure (capex) and reduce its exposure to foreign currency risks. The company plans to minimize outstanding letters of credit obligations and renegotiate tower lease contracts to mitigate currency exposure effectively.

Despite the prevailing challenges, MTN Nigeria remains confident in the underlying strength of its business. While acknowledging the persistence of negative external factors, the company anticipates improvements in its financial position by 2025, signaling resilience amidst adversity.

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