MTN Nigeria has released its financial results for the year ended 31 December 2023, revealing a significant loss following currency devaluation impacts.
Challenges Amid Resilient Momentum: Despite facing a challenging operating environment, MTN Nigeria maintained its commercial and operational momentum in FY 23. Key metrics such as data traffic and MoMo PSB transaction volume exhibited robust growth, driving a 22.7% increase in local currency service revenue. However, the sharp devaluation of the naira against the US dollar in the second half of 2023 adversely affected MTN Nigeria’s financial performance.
Financial Impacts:
The currency devaluation led to higher operating costs, net finance costs, and foreign exchange losses for MTN Nigeria. Consequently, the company reported a loss after tax of N137.0 billion for FY 23, compared to a restated profit after tax of N348.7 billion in 2022. Adjusting for net forex loss, the profit after tax would have been N344.5 billion, reflecting a decrease of 14.3% year-on-year. Despite the loss, MTN Nigeria maintained a strong free cash flow generation, amounting to N631.6 billion, up by 11.6% from the previous year.Restatement of Financials: In response to the currency devaluation and its impacts, MTN Nigeria restated its financial results for the year ended 31 December 2022. The restatement included adjustments for forex impacts and reassessment of lease terms. As a result, the opening balance of total equity for FY 2022 was restated lower by N63.0 billion, with FY 2022 profit after tax restated lower by N10.2 billion. This led to a closing total equity at 31 December 2022 of N262.5 billion, with earnings per share restated lower to N16.8.
Impact on MTN Group: The restatements by MTN Nigeria also had implications for the MTN Group’s financials. The FY 22 opening total equity balance for the Group was restated lower by R2.4 billion, with FY 22 profit after tax restated lower by R407 million. This resulted in a closing total equity at 31 December 2022 of R119.6 billion. Group FY 2022 earnings per share and headline earnings per share are expected to reduce by approximately 17 cents due to the restatements. Importantly, these effects are non-cash in nature and do not impact the Group’s cash and cash equivalents.
Conclusion: The release of MTN Nigeria’s financial results highlights the challenges faced by the telecommunications giant in the Nigerian market due to currency devaluation. Despite the loss, the company maintains its operational strength, demonstrating resilience amidst adverse economic conditions. The restatement of financials underscores the need for companies to adapt and adjust to currency volatility, ensuring accurate reflection of their financial position and performance.
Summary of Financial Impact
| Financial Metric | FY 2023 | FY 2022 (Restated) |
|---|---|---|
| Profit After Tax (Naira) | (Loss) N137.0 billion | N348.7 billion (restated lower by N10.2 billion) |
| Total Equity (Naira) | N208.0 billion (negative retained earnings) | N262.5 billion (restated lower by N63.0 billion) |
| Earnings Per Share (Naira) | Not provided | N16.8 (restated lower) |
| Total Equity (Rand) | Not provided | R119.6 billion (restated lower by R2.4 billion) |
| Earnings Per Share (Rand) | Not provided | (Reduced by approximately 17 cents) |
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