MTN Group’s CEO, Ralph Mupita, believes the worst is over for the company in Nigeria as it recovers from severe losses due to naira devaluation. The Nigerian unit’s pre-tax loss increased significantly amid ongoing economic challenges. MTN has implemented various measures to improve profitability and is cautiously optimistic about its recovery, while facing challenges in Sudan due to ongoing conflicts.
Ralph Mupita, the CEO of MTN Group, has expressed optimism regarding the recovery of the company’s Nigerian unit, declaring that the worst appears to be over. This recovery comes after a substantial devaluation of the naira, which contributed to a reported annual pre-tax loss of R4.4 billion for the corporation. The Nigerian economy has been grappling with chronic dollar shortages, leading the government to devalue the naira in efforts to stabilize the currency and attract investment.
High inflation and interest rates have exacerbated the situation, resulting in a pre-tax loss for MTN Nigeria that surged over 200% to ₦550.3 billion (R6.4 billion). In the year ending December 31, MTN reported a group-level loss before tax of R4.4 billion, a stark decline from the profit of R12.2 billion recorded in 2023. To address the issue of liabilities surpassing assets, MTN Nigeria is pursuing several initiatives, including renegotiations of tower leases and a tariff increase that received approval in January.
Mupita noted, “That pain which we’ve had for 18 months is abating somewhat…the business is growing very strongly. So I’m actually very bullish and confident that we’ll see strong recovery in Nigeria.” The MTN Group, which serves 291 million customers across 16 African markets, has managed to save R3.8 billion in operational costs, with R1.2 billion of those savings resulting from the renegotiated tower leases, as stated by Chief Financial Officer Tsholofelo Molefe.
In Sudan, MTN’s performance was adversely affected by ongoing armed conflict, leading to impairments amounting to R11.7 billion. Mupita reported that the company has begun to restore connectivity in conflict-affected areas, specifically in the capital, Khartoum, where network operations had been halted since April 2023. An analysis by Peter Takaendesa, head of equities at Mergence Investment Managers, revealed that despite macroeconomic challenges, the underlying revenue performance appeared strong, although currency fluctuations were largely beyond MTN’s control. Additionally, group service revenue experienced a decrease of 15% to R177.8 billion, yet displayed a 14% increase in constant currency terms.
In summary, MTN Group is cautiously optimistic about its recovery in Nigeria following significant financial losses attributed to currency devaluation and economic challenges. With targeted initiatives to restore profitability and a noted reduction in operational costs, the company is poised for a potential turnaround. However, ongoing conflicts in regions such as Sudan continue to pose significant risks to operational performance. Overall, MTN remains focused on enhancing its market position across Africa amidst these challenges.
Original Source: techcentral.co.za
