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MTN Nigeria Communications Plc released its unaudited financial statement for the first quarter of 2024, revealing a staggering net foreign exchange (FX) loss of N656.4 billion. This adds to the telecom giant’s ongoing financial woes, with total FX losses reaching N1.396 trillion from 2023 to Q1 2024.
The company’s financial struggles are emblematic of broader challenges faced by Nigerian firms, with Cadbury, Unilever, PZ Cussons, BUA Foods, Nestle, and Flour Mills of Nigeria also grappling with FX losses.
MTN Nigeria’s precarious financial position is underscored by its total liabilities surpassing its total assets by N434.72 billion, indicating potential insolvency. With a current ratio of 0.433, the company may face difficulties meeting short-term obligations, including debt repayment.
Despite a 32.54% revenue increase to N752.983 billion, MTN Nigeria reported a loss before tax of N575.692 billion and a loss after tax of N390.668 billion, marking a stark contrast from profits recorded in Q1 2023.
CEO Karl Olutokun Toriola attributed the substantial FX losses to the further depreciation of the naira, resulting in a loss after tax of N392.7 billion. Adjusting for the net forex loss, the company’s profit after tax would have been N47.1 billion, reflecting underlying resilience.
Moreover, MTN Nigeria barred 8.6 million subscribers in Q1 2024 for non-compliance with National Identification Number (NIN) linkage requirements, following an industry-wide directive from the National Communications Commission (NCC). The company is actively working to expedite the NIN verification exercise to minimize service disruptions.
This latest financial setback follows MTN Nigeria’s FX losses in 2023, totaling N740.4 billion, which significantly impacted shareholders’ funds. Tower lease costs, primarily indexed to the US dollar, emerged as a major contributor to the company’s FX exposure, highlighting the complexities of operating in Nigeria’s volatile economic landscape.
