Business
We’re in talks with NCC to increase tariff, says MTN Group CEO
MTN Group says it is in talks with the Nigerian Communications Commission (NCC) to increase tariffs due to foreign exchange (FX) impact.
Ralph Mupita, MTN Group’s chief executive officer, spoke during an interview with Bloomberg on Monday.
“We obviously are engaged with the authorities and regulators to get some tariff increases for both voice and data, so that we can actually absorb some of the inflation-related and FX impacts that are in our operating costs, particularly the network operating costs,” he said.
Mupita made this known while speaking on three broad areas the company is working on to limit the impact of the currency devaluation.
Aside from speaking with the regulator, he said part of the solution in tackling FX impact could be through borrowings, renegotiating with IHS Towers, a telecommunications infrastructure provider, and reducing expenditure.
“There are not too many kinds of derivative instruments that we can use against the FX impacts that we have seen, but there are three broad areas that we are working on, in terms of limiting the impact of currency devaluation,” he said.
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“The first is to look at borrowings and that would have taken particularly the kind of letters of credit that would have been used to procure capex, so looking at reducing the outstanding balances there.
“The other is we are in conversations with IHS, in particular around some of our top contracts. We have sat down and we are looking at aspects that we can renegotiate to lessen the impact.
“And the third is actually to reduce expenditure. Nigeria is a big part of our expense efficiency program. We were looking to take out 7 to 8 billion rand of expenses out of construction on a sustained ongoing basis. So those are some of the initiatives that we are taking.
Mupita said there was almost a 97 percent decline in the value of the naira, which reduced earnings from the Nigerian market.
“The big impact on our results was that we had significant naira devaluation, the naira at the midpoint of the year was around 462. We ended the year at 907, almost 97% devaluation of the naira,” Mupita said.
“When we consolidate at the group level, obviously, the Nigeria earnings would have been reduced. But, there was a second headwind, which was that there were foreign exchange losses that came through.
“So when we report underlying earnings, headline earnings of 1203, almost 500 of that was a loss coming out of Nigeria. Quite a significant impact on the reported results, but the underlying momentum that we saw in the business actually was pretty resilient.”
He said naira devaluation had the most significant impact on MTN group results.