MTN Nigeria bars 8.6m subscribers, records N656.4 billion in FX losses as financial troubles deepen

MTN Nigeria Communications Plc has continued to struggle in Africa’s most populous nation, incurring net foreign exchange(FX) losses of N656.4 billion in the first quarter (Q1) of 2024. Hence, MTN Nigeria’s total net FX losses from 2023 to the Q1 of 2024 stood at N1.396 trillion.

These were obtained from the telco’s Q1 2024 unaudited financial statement released to Nigerian Exchange Limited last Tuesday.

MTN Nigeria is not the only firm hard hit by FX losses. Cadbury, Unilever, PZ Cussons, BUA Foods, Nestle, Flour Mills of Nigeria, among others, have also been affected.

READ ALSO: MTN Nigeria goes technically insolvent as forex crisis hits telco

MTN Nigeria’s total liabilities are higher than its total assets by N434.72 billion, signifying that the firm is technically insolvent or bankrupt. Its current ratio stands at 0.433, implying that MTN Nigeria may struggle to meet its short-term obligations such as debt.

Financial analysts contend that a current ratio of less than 1 is an indication that the firm cannot meet its short-term obligations, whereas a current ratio of above 1 implies that it can and is healthy.

MTN Nigeria grew revenue to N752.983 billion, representing a 32.54 percent increase from N568.136 billion recorded in the corresponding period of 2023. The company incurred loss before tax of N575.692 billion and loss after tax of N390.668 billion. These are departures from N162.914 billion profit before tax and N107.621 billion profit after tax reported in the first quarter of 2023.

Year-on-year, MTN Nigeria’s FX losses in Q1 of 2024 represents 14 times higher from N4.5 billion FX losses recorded in the corresponding period of 2023.

READ ALSO: MTN challenges Nigerian govt’s $48m tax in court as forex crisis bites

“The further depreciation of the naira in Q1 resulted in a materially higher net forex loss of N656.4 billion (Q1 2023 restated: N4.5 billion), arising from the revaluation of foreign currency denominated obligations. This led to a loss after tax of N392.7 billion compared to a restated PAT of N108.4 billion in Q1 2023,” said MTN Nigeria’s Chief Executive Officer, Mr Karl Olutokun Toriola.

“This has resulted in negative retained earnings and shareholders’ equity at the end of March 2024 of N599.2 billion and N434.7 billion, respectively. However, adjusting for the net forex loss, PAT would have been N47.1 billion (down by 57.8%), reflecting the underlying resilience of our financial performance under tough conditions.,” Mr Toriola noted.

8.6m subscribers barred

Meanwhile, the telecoms company barred 8.6 million subscribers for various offences in the first quarter of 2024.

According to MTN Nigeria, the National Communications Commission (NCC) issued an industry-wide directive requiring full barring of subscriber lines not linked to their National Identification Number (NIN).

READ ALSO: Mike Adenuga-owned Conoil grew profits by 503% but 50 staff lost their jobs

“All lines for which the subscribers failed to submit their NIN were to be barred on or before 28 February 2024. Where five or more lines are linked to an unverified NIN, such lines must be barred on or before 29 March 2024. Likewise, if less than five lines are linked to an unverified NIN, such lines must be barred on or before 15 April 2024.
As at 29 March, we had effectively barred the affected subscribers in the first two batches, and most of these subscribers have since been successfully reinstated,” the company’s CEO further said.

“The net effect was a 2 million reduction in our total subscribers in Q1 despite barring 8.6 million affected subscribers. This was supported by our aggressive drive for gross connections. The NCC has extended the 15 April deadline for barring subscribers with less than five lines linked to an unverified NIN to 31 July 2024. This provides more time for our approximately 8.9 million affected subscribers to complete the necessary verification exercise.”

MTN Nigeria said it remained actively engaged with the authorities to expedite the NIN verification exercise and to ensure all subscribers were verified within the stipulated timeframe, noting that this would minimise service disruptions to its base and mitigate any potential impact on the revenue.

Same as 2023

The telco also suffered FX losses in 2023. The telecoms company incurred net forex losses of N740.4 billion as against N81.8 billion reported in the corresponding period of 2022, Economy Post reported.

Loss after tax stood at N137 billion compared to a profit after tax of N348.7 billion in 2022, wiping off shareholders’ funds.

READ ALSO: Maputo Declaration: 20 years after, Nigeria yet to implement commitments to food security

Toriola had said at that time that “MTN Nigeria’s operations are exposed to foreign currency volatility on its operating and capital expenditure. The most significant of these exposures relates to the tower lease costs, which comprised the bulk of the 45-50% foreign currency exposure in our operating expenses in 2023.”

He added, “The majority of the lease costs are indexed to the US dollar but are invoiced and paid in naira. Our tower lease costs are recognised in line with IFRS 16 and IAS 21, which has had several impacts on our financial performance.”

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Stella Odiche
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