MTN Group, Africa’s largest mobile operator, is expecting a sharp drop in its earnings for the full year ended 31 December, as a result of the depreciation of the value of naira in Nigeria, its biggest market.
The Johannesburg-headquartered company today published a trading update, as it is in the process of finalising its results for the period.
MTN expects to publish its full-year results on 25 March.
The company says it anticipates reporting a resilient underlying operational performance for FY23 in a challenging operating environment.
The financial result has, however, been negatively affected by the sharp devaluation in the naira against the US dollar impacting MTN Nigeria’s financials.
This mainly drove higher operating and net finance costs for MTN Nigeria, which are expected to impact the group’s FY23 financial performance, says the firm.
The naira has been having a turbulent time in Nigeria in recent times. Reports from Nigeria show that in the last 10 years, the country’s currency has depreciated by 89.73% at the official market. It has continued to weaken against the US dollar, resulting in rising inflation, erosion of purchasing power, reduced investment and pressure on businesses.
Amid the currency decline, MTN says the foreign exchange losses in MTN Nigeria’s financial results are estimated to be 593c (2022: 52c) in the group FY 23 results.
The company has over 77 million subscribers in Nigeria, one of its key operations on the continent.
MTN advises shareholders that it is expecting a decrease in earnings per share (EPS) of between 90% and 70% (or 964c and 750c).
Considering the reported EPS for the corresponding financial year ended 31 December 2022 (FY22) of 1 071c, this translates to a range of 107c to 321c for FY23.
The company is also expecting a decrease in headline earnings per share (HEPS) of between 80% and 60% (or 923c to 692c).
Considering the reported HEPS of 1 154c for the corresponding FY22, this translates to a range of 231c to 462c for FY23.
It explains that HEPS was negatively impacted by some non-operational items of approximately 889c (2022: 159c) for FY23.
Meanwhile, subsidiary MTN Nigeria today announced its full-year results, confirming that its financial performance was negatively affected by the sharp devaluation in the naira against the US dollar in H2 2023.
“This impact is seen mainly in higher operating, net finance costs and foreign exchange losses,” says MTN Nigeria.
“In this context, MTN Nigeria’s FY23 financial results came under severe pressure, with a reported loss after tax of N137 billion compared to a restated profit after tax of N348.7 billion in 2022. This resulted in negative retained earnings and total equity at the end of December 2023 of N208 billion and N40.8 billion, respectively.”
However, it says MTN Nigeria sustained its resilient commercial and operational momentum in a challenging operating environment in FY23, with pleasing user base expansion across its connectivity business and platforms.
MTN Nigeria also reported continued strong growth in key commercial metrics – including data traffic (up 44.9% year-on-year) and MoMo transaction volume (up 49.2% year-on-year) – both of which drove robust local currency service revenue growth of 22.7% in FY23, with an acceleration in Q4 2023 (up 25% year-on-year).
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