MTN Nigeria Communications Plc, on Friday announced a N137 billion loss in its audited result and accounts for the period ended December 31, 2023, from the N348.73 billion profit declared in 2022.
The loss was attributed to the naira devaluation by the Central Bank of Nigeria (CBN).
The telecommunication company on the Nigerian Exchange Limited (NGX) declared N177.89billion loss before tax in 2023 from N518.82billion profit before tax in 2022, as the net loss for the year resulted in a depletion of its retained earnings and shareholders’ fund to negative N208.0 billion and N40.8 billion, respectively.
Its capital expenditure (capex) increased by 13.2percent to N571.0 billion (up 24.5 percent to N449.3 billion, ex-leases).
The group declared N2.47 trillion revenue in 2023, representing an increase of 23 percent from N2.01trillion reported in 2022.
The company explained that the demand for its services was resilient despite the overall challenging operating conditions.
In 2023, the company recorded a foreign exchange gain of N93.8 billion (58.3percent unrealised) from the revaluation of our financial assets and a foreign exchange loss of N834.3 billion (82.8percent unrealised) from the revaluation of financial liabilities.
This led to the reported net foreign exchange loss of N740.4 billion in 2023, bringing its net finance costs to N951.5 billion, up 341.9percent.
This resulted in the reported loss after tax of N137.0 billion and a depletion of our retained earnings and shareholders’ funds to negative N208.0 billion and N40.8 billion, respectively.
The CEO, MTN Nigeria, Mr. Karl Toriola, in a statement explained that “2023 witnessed a very challenging operating environment characterised by rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in Q1 arising from a redesign of the naira. These factors created severe headwinds for our customers and our business during the year.
“The inflation rate increased throughout the year, reaching 29.9percent in December 2023 – the highest reading in 18 years – with an average rate of 24.5percent.
“This was further exacerbated by higher fuel prices, arising from the removal of the fuel subsidy in May 2023, with the average prices of diesel and petrol up by 66.4percent and 257.1percent in 2023 to N1,416.8/litre and N600/litre, respectively.
“In June 2023, the Central Bank of Nigeria (CBN) adopted a more liberal foreign exchange management system and reintroduced the ‘willing buyer, willing seller’ model. This has resulted in a 96.7percent unfavourable movement in the exchange rate against the US dollar from N461.1/US$ in December 2022 to N907.1/US$ (Nigerian Autonomous Foreign Exchange Market (NAFEM) rate) in December 2023.
“This development contributed meaningfully to the upward pressure on the cost of doing business in Nigeria, and for MTN Nigeria in particular, significantly increased the costs in relation to our tower leases.
“In December 2023, we released an announcement relating to an industry-wide directive issued by the Nigerian Communications Commission (NCC) to operators in the country. This directed operators to implement full network barring on all subscriber lines for which subscribers have not submitted their National Identity Numbers (NINs) and those whose NINs are unverified.
“To mitigate the effects of these headwinds on our operations, we continued to invest in our network infrastructure – with a disciplined focus on value-based capital allocation and efficiencies – to enhance capacity and expand coverage. This enabled us to meet the rising demand for data and, coupled with compelling and competitive propositions for our customers, accelerate the growth of our commercial operations.”
“Looking forward, we remain focused on sustaining our commercial momentum and accelerating our service revenue growth, improving the profitability of the business, and strengthening the balance sheet. Since December 2023, we have progressed constructive discussions with IHS on changes to the existing tower lease contracts that could, if successful, result in improvements that help us mitigate macro risks, including currency.
“As we execute our strategy, we will continue to invest in the business and unlock efficiencies to drive operating leverage with a focus on reestablishing earnings growth as well as sustaining our strong free cash flow generation and returns.”
Meanwhile, MTN Group and Huawei have signed a Memorandum of Understanding (MoU) for a Joint Innovation Technology Lab, aiming to deepen cooperation in technological innovation. The signing ceremony, which was held at MWC Barcelona, Spain was attended by senior delegations from MTN and Huawei.
According to a statement obtained on Friday, the strategic partnership would see the creation of an Innovation Technology Lab at MTN Group’s headquarters in South Africa.
The lab would serve as a neutral platform for collaboration within Africa’s digital ecosystem, accelerating the development, deployment and adoption of innovative digital solutions driven across the continent.
Together, the two companies would leverage the initiative to focus their research and development efforts on key areas such as 5G and beyond, Artificial Intelligence, Big Data analytics, cloud computing, and digital financial services.
The partnership aims to accelerate the time-to-market of MTN’s products and services while addressing the unique challenges faced in Africa, including improving network coverage in rural areas, enhancing energy efficiency, and affordability.
Additionally, MTN’s operational teams would actively participate in the innovation process, ensuring the solutions developed directly address real-world challenges and drive meaningful digital transformation and sustainable development in Africa.
Group Chief Technology and Information Officer Mazen Mroué expressed enthusiasm about the partnership stating that, “the Joint Innovation Technology Lab is more than a partnership between two companies, it’s an investment in the growth of Africa’s digital ecosystem.
“We believe that collaboration is essential for developing solutions that truly meet the continent’s needs, and this Lab will pave the way for a more inclusive, sustainable, and prosperous future for Africa.”
Huawei’s Corporate Senior Vice President and President of ICT Sales & Service, Li Peng said, “Huawei will continue innovating with MTN to ensure they have the products and solutions required to best serve Africa’s unique market. This will not only give MTN a competitive edge in terms of network quality, user experience, and rapid deployment, but also help MTN achieve their own business objectives.
“We believe that this newly established lab will help supercharge both MTN’s R&D as well as Africa’s digital economy, bringing more prosperity to the African continent.”
Kayode Tokede
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