MTN Faces Earnings Slump as Forex Woes Mount

MTN Group is bracing for a sharp decline in earnings, with foreign exchange losses and asset impairments weighing heavily on its financial outlook. The telecom giant, which operates across multiple African markets, has particularly felt the impact in Nigeria, its largest revenue generator.

Currency Crisis Hits MTN Nigeria Hard

Nigeria’s ongoing economic turmoil has dealt a major blow to MTN’s financial health. In the third quarter of 2024, the company reported a staggering after-tax loss of ₦514.9 billion, largely driven by the devaluation of the naira. The fluctuating exchange rates and rising inflation have put immense pressure on MTN’s operations in the country, significantly eroding its bottom line.

Signs of Resilience in Ghana

Despite struggles in key markets, MTN has seen some bright spots. MTN Ghana reported a robust 31.2% growth in service revenue during the first half of 2024, reaching GHS 8.1 billion (520 billion). The surge was fuelled by an increase in mobile subscribers and the growing adoption of mobile money services, which have become an integral part of the company’s revenue stream.

Economic Headwinds Across Africa

MTN’s financial challenges are not limited to Nigeria. High inflation rates, currency volatility, and geopolitical instability have created a tough operating environment in several African markets, including Sudan. The first quarter of 2024 saw MTN’s service revenue decline by 18.8% compared to the same period in 2023. However, in constant currency terms, the company posted an 11.1% increase, suggesting strong underlying business performance despite macroeconomic challenges.

Strategic Moves to Mitigate Losses

In a bid to counteract these financial pressures, MTN has explored strategic pricing adjustments. In March 2024, the company considered tariff hikes to offset approximately $101 million in forex-related losses. This reflects MTN’s broader efforts to stabilise its earnings amidst currency devaluations and economic uncertainty.

As MTN prepares to unveil its full-year financial results for 2024, all eyes will be on how the company navigates these turbulent economic conditions. Shareholders and industry observers await further insights into MTN’s strategy for sustaining growth in an increasingly volatile market.