MTN Nigeria records massive N740bn FX losses in FY 2023 report

MTN Nigeria Plc has reported a massive foreign exchange loss of N740 billion up from N81 billion reported in 2022 signifying the company’s first-ever loss since it became a quoted company in Nigeria.

This led to a loss before tax of N177.8 billion compared to a pre-tax profit of N518.8 billion a year earlier. The losses resulted in a wipe-out of shareholders’ funds.

This development was announced in the company’s audited consolidated and separate financial statements for the year ended 31 December 2023 submitted to the Nigerian Xchange Goup (NGX) on March 1, 2024.

The statement from MTN reads, “the loss was significantly due to operational changes to the Nigerian Foreign exchange market, including the abolishment of the segmented/parallel structure announced by CBN in June 2023.”

MTN also stated that it has used an official (NAFEM) exchange rate of N907.11/$1 as of 31 December 2023 suggesting losses could be wider if the current exchange rate between the naira and dollar persist by the end of March when it publishes its Q1 results.

Continuing, it stated that the net loss for the year had resulted in a depletion of its retained earnings and shareholders’ fund to negative N208.0 billion and N40.8 billion, respectively.

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Consequently, due to the substantial currency devaluation and its repercussions on retained earnings, the Directors have proposed not to issue a final dividend payment, given the resultant loss for the year ended December 31, 2023.

Meanwhile, the revenue of the company grew to N 2.47 trillion for the year ended 31 December 2023 up from the N2.01tr in 2022 representing a +22.69% YoY.

Similarly, operating profit grew by 5.38% YoY to N773.660 billion from the N734.164 billion in 2022. The company’s Profit after tax in 2023 declined by N137bn

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Similarly, Earnings Before Interest, Tax, Depreciation And Amortisation (EBITDA) grew by 12.3% to N1.2 trillion

“2023 witnessed a very challenging operating environment characterised by rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in Q1 arising from a redesign of the naira.

“These factors created severe headwinds for our customers and our business during the year. The inflation rate increased throughout the year, reaching 28.9% in December 2023 – the highest reading in 18 years – with an average rate of 24.5%.

“This was further exacerbated by higher fuel prices, arising from the removal of the fuel subsidy in May 2023, with the average prices of diesel and petrol up by 66.4% and 257.1% in 2023 to N1,416.8/litre and N600/litre, respectively. In June 2023, the Central Bank of Nigeria (CBN) adopted a more liberal foreign exchange management system and reintroduced the ‘willing buyer, willing seller’ model.

“This has resulted in a 96.7% unfavorable movement in the exchange rate against the US dollar from N461.1/US$ in December 2022 to N907.1/US$ (Nigerian Autonomous Foreign Exchange Market (NAFEM) rate) in December 2023.

“This development contribute meaningfully to the upward pressure on the cost of doing business in Nigeria, and for MTN Nigeria in particular, significantly increased the costs in relation to our tower leases” a statement by the company said.