Telecom giant MTN Nigeria is feeling the burn of soaring inflation and a plunging currency. The company reported a staggering ₦392.7 billion net loss for Q1 2024 as economic headwinds battered its bottom line.
The culprits? Relentless inflation coupled with the naira’s precipitous plunge to a record low of ₦1,672 per dollar in March. These forces drove a 1.9% year-over-year decline in EBITDA to ₦297 billion.
“It’s been an extremely challenging operating environment with high inflation and continued naira depreciation against the dollar,” lamented CEO Karl Toriola.
The naira’s dramatic devaluation translated into ₦656.4 billion in brutal net foreign exchange losses for MTN as it revalued its dollar-denominated obligations. Consequently, accumulated losses ballooned to ₦599.2 billion with negative shareholder funds of ₦434.7 billion.
Regulatory Demands Slow Subscriber Growth
In addition to economic pressures, regulatory requirements for subscriber registration by the Nigerian Communications Commission (NCC) hampered customer growth. While total subscribers inched up 1.3% year-over-year to 77.7 million, that growth rate slowed compared to the prior quarter.
Still, service revenue demonstrated resilience, surging 32.5% to ₦753 billion for the quarter. MTN’s fintech segment performed admirably as well with active mobile money subscribers skyrocketing 48% to 4.8 million, although fintech revenue was flat.
Plotting a Turnaround Amid the Storm
Facing its capital deficit head-on, MTN Nigeria is actively engaging authorities to approve tariff hikes while simultaneously working to reduce its exposure to the volatile U.S. dollar.
The road ahead remains fraught, but the telecom leader is evolving its strategy to better navigate the turbulent economic landscape. Proactive measures to fortify its capital base and temper forex impacts are paramount.
“Our aim is to take the right steps to effectively mitigate risks in this challenging period while sustaining growth over the long-term,” affirmed Toriola.
For MTN and its stakeholders, Q1’s whopping loss underscores the economic typhoon currently battering corporate Nigeria. Whether the company can batten down the hatches remains to be seen.
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