Nigeria helps drag MTN into a massive loss

1 month ago 89

MTN Group is going through an exceptionally difficult patch. The pan-African telecommunications operator warned on Wednesday that it expects to report a massive half-year less when it publishes its interim financial results to June next month.

The warning – of a headline loss of as much as R2.71/share – is mainly the result of its ongoing troubles in Nigeria, where the collapsing naira is strangling the company, despite a reasonable underlying performance.

The losses come despite improvements in some key markets, including Ghana and Uganda. South Africa, too, is expected to “encouraging progress in key areas of the business”.

Interim group Heps – headline earnings per share – will be negatively impacted to the tune of R6.29 by a range of non-operational items, including:

Foreign exchange losses of -R5.19 (2023: -R1.69), which include a naira depreciation impact of -R3.89 (2023: -R1.23);
Hyperinflation adjustments of -57c (2023: -38c);
Deferred tax charge/asset reversal of -28c (2023: nil); and
Other non-operational items of -25c (2023: nil).

“The group anticipates reporting a resilient underlying performance, with pleasing momentum in some key markets,” MTN said in a trading update published after the market closed in Johannesburg on Wednesday.

In the same update, MTN said its Nigerian operation has concluded the renegotiation of tower lease agreements with IHS Towers and American Tower Corporation.

Revised terms

“The revised terms meaningfully reduce the US dollar-indexed component of the leases linked to a discounted US consumer price inflation rate, making the leases majority naira-linked, as well as set a cap for the naira CPI escalator component. They also remove technology-based pricing, allowing payments for new upgrades based on tower space and power,” MTN said.