MTN Nigeria Falls below N4trn after N888bn FX Loss
Telecommunications giant, MTN Nigeria Plc’s, market value has slumped below N4 trillion, first time in a long time, following crunching selloffs that hit its stock due to unimpressive earnings, weak performance outlook.
To reduce their risk position, some shareholders dumped the telecom company shares on the Nigerian Exchange in reaction to the earnings slump, and broken balance sheet position.
Last week, its share price fell to N190 on the local bourse, down by more than 5.26% from N200. This reduced its market value to N3.98 trillion, now trading at a 40.58% discount to its 52-week high.
The company share price had rose in the year to N319.80. Details from its unaudited financial statement showed that the top player in the telecom report a huge FX loss in the first half due to Nigerian naira negative exchange rate fluctuations.
Its sizeable foreign currency denominated lease liabilities, borrowings, and other payables caused a 95.2% increase in net foreign exchange loss to N887.7 billion, analysts said. MTN Nigeria’s net loss widened to N519.1 billion in the first half of 2024, which is six times higher than the loss of N85.6 billion reported 12 months earlier.
Hence, the telco company lost N24.7 on each share deployed for business in the first six months of operations in 2024, which was significantly higher than N4.1 loss per share in the first half of 2023
Its net finance cost rose 96.0% year on year to N168.2 billion. The telco operating expenses rose 43% to N422.7 billion, fueled by the about 4times increase in software maintenance costs and the 122.2% growth in professional fees
Analysts at CardinalStone said the company’s net asset value remained weak as protracted net losses led to a 14.1x decline in shareholders’ funds to -N577.7 billion.
In contrast, analysts said the telecom company’s total asset value increased by 3.02 % even as the return on assets remained negative at -32.1%. #MTN Nigeria Falls below N4trn after N888bn FX Loss Liquidity: Banks Drive Yield Surge with T-Bills Selloffs
