MTN Nigeria’s stock price fell 9.1% due to a 399.45 billion naira net loss for the fiscal year, largely attributed to forex losses from naira devaluation. Though the naira lost value, it has remained stable since December. The company anticipates profitability through recent tariff increases and improved currency stability.
MTN Nigeria Communications Plc experienced a significant decline in its stock price, falling 9.1% to 240 naira, marking the largest decrease in nearly 10 months following the naira’s sharp devaluation. The shares quickly rebounded to remain steady throughout the session.
For the fiscal year concluding in December, MTN reported a staggering net loss of 399.45 billion naira (approximately $266 million), contrasted with a loss of 133.8 billion naira in 2023. The company attributed its financial difficulties primarily to foreign exchange losses stemming from the revaluation of its foreign-currency obligations.
The naira devalued by around 40% in 2024 as a result of currency reforms that were implemented to loosen its peg against the US dollar. Despite this, the naira’s value has maintained relative stability since early December. Matilda Adefalujo, an equity analyst at Meristem Securities in Lagos, highlighted significant challenges the company has faced regarding its cost structure.
MTN Nigeria’s operational expenses surged by 76.6%, leading to a contraction of its earnings before interest, taxes, depreciation, and amortization (EBITDA) margin by 9.6 percentage points. As the nation’s largest telecom firm, MTN has recently received government approval to raise tariffs, which is expected to bolster service revenue growth and enhance the EBITDA margin to a range of “at least mid-40%” by 2025.
Adefalujo expressed optimism regarding the tariff increase and the relative stability of the naira, predicting that these factors would assist MTN in returning to profitability.
In summary, MTN Nigeria has faced significant financial challenges due to the devaluation of the naira, resulting in a substantial loss for the year. Operational costs have significantly increased, impacting profitability. However, regulatory changes allowing for tariff increases may pave the way for future financial recovery as the naira stabilizes.
Original Source: businessday.ng
