For several months, Nigerian telecom operators have been vocal about the adverse effects of the national macroeconomic environment on their operations.
To mitigate these impacts, they have sought permission to increase the prices of their services.
MTN Nigeria, a subsidiary of the South African telecommunications giant MTN Group, reported a post-tax loss of 519.1 billion naira ($314 million) for the first half of 2024.
The company attributed this significant loss to challenging macroeconomic conditions, including rising inflation and the continuous depreciation of the naira against the US dollar and other currencies.
Inflation and Currency Depreciation
Karl Toriola, the CEO of MTN Nigeria, detailed these challenges in the company’s financial results for the first half of the year.
“The inflation rate reached 34.2% in June, with an average rate of 32.8% over the semester. The naira closed June 2024 at 1,505 NGN/USD (compared to 907 NGN/USD in December 2023) on the Nigerian Autonomous Foreign Exchange Market (NAFEM),” Toriola explained.
Financial Performance Metrics
At the end of the semester, MTN Nigeria’s earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased by 10.9%, falling to 547.7 billion naira.
The EBITDA margin dropped by 17.4 percentage points, settling at 35.6%. The post-tax profit, adjusted for net exchange losses, plummeted by 56%, down to 102.3 billion naira.
Positive Operational Indicators
Despite these financial difficulties, MTN Nigeria displayed positive operational indicators. The total number of subscribers grew by 2.9%, reaching 79.4 million.
Active data users increased by 11.1%, totaling 45.6 million. Additionally, the number of active mobile money (MoMo PSB) wallets surged by 73.9%, reaching 5.5 million. Service revenue rose by 32.6%, amounting to 1,528 billion naira.
Strategic Focus for the Second Half of the Year
Looking ahead to the second half of the year, MTN Nigeria plans to focus on navigating the current economic landscape and capitalizing on growth opportunities.
“We are committed to implementing strategic initiatives to enhance our performance and strengthen our market position. Additionally, we are dedicated to accelerating the growth of our business operations, optimizing our operational efficiency, and bolstering our balance sheet,” Toriola stated.
Conclusion
In summary, MTN Nigeria faces significant financial challenges due to a tough macroeconomic environment marked by high inflation and currency depreciation.
However, the company remains optimistic about its future, with plans to implement strategic initiatives aimed at improving performance and seizing growth opportunities. Despite financial setbacks, MTN Nigeria’s operational metrics show promising growth in subscriber numbers, data users, and mobile money services.