MTN Nigeria Declines in Value After Earnings Slump

MTN Nigeria Declines in Value After Earnings Slump

The market value of MTN Nigerian Plc declined as investors continued to sell their shares in the telecom company as a devaluation of the naira triggered foreign exchange losses that impacted its bottom line.

Closed at N234 per share on Friday, the telecom company’s market value fell below N5 trillion last week, losing 6% of the last seven trading sessions, from N249. Data from the local bourse showed that MTNN market valuation dropped to N4.9 trillion.

Last week, equities investors rotated out from MTN Nigeria amidst N53 billion working capital raised from commercial paper sales. Its latest earnings release showed that profit slumped strongly due to FX losses. Hence, earnings per share (EPS) declined to N7.06 from N12.89 in the comparable period in 2022.

Detail from the unaudited financial statement showed that MTN Nigeria’s revenue grew by 21.8% year on year to N1.77 trillion in nine months of financial year 2023 from N1.46 trillion in the comparable period in 2022.

As an industry leader, data revenue remained strong, up 36.4% year on year to N749.53 billion from N549.66 billion in the comparable period in 2022.

This was supported by an increase in the penetration of smartphones, and investments in its network to expand coverage and capacity and enhance customer experience.

MTN Nigeria said active data users increased by 13.3% year on year to 43.1 million, adding 3.6 million active users in 9M 2023. Management said the company’s 4G network now covers 80.5% of the population, up from 79.1% in December 2022.

Voice revenue also grew at a double-digit rate of 10.6% year on year to N834 billion. Analysts attribute the growth in voice revenue to its rural expansion program and the increase in voice subscribers.

MTN Nigeria saw a 4.8% increase in its subscriber base, adding 2 million subscribers to increase the mobile subscribers to 77.8 million in 9M 2023, according to a review of its numbers.

In addition, the telecom giant recorded a 5.6% surge in fintech revenue which hit N64.69 billion, and digital revenue which jumped by 55.4% to N24.71 billion in 9M 2023.

In the period, operating expenses rose by 22.2% to N417.42 billion from N341.64 billion. Analysts said this was driven by higher lease rental costs impacted by the naira devaluation, higher consumer price index (CPI) and energy costs, and the 2023 Finance Act which introduced VAT on tower leases effective September 2023.

Down the line, the telecom company saw operating profit jump by 13.2% to N608.43 billion from N537.68 billion in 9M 2022. Propelled by forex loss, the company’s net finance costs increased by 174.41% year on year to N375.96 billion from N137 billion a year ago.

MTN Nigeria lost N232.8 billion on the company’s net foreign currency liabilities following the significant devaluation of the naira in June.

To sustain revenue growth, the company used trade lines to fund credits used for its network capital expansions. This resulted in an additional unrealized forex loss of N87.5 billion on outstanding matured trade obligations as of 30 September 2023.

At the end of the period, MTN Nigeria’s profit declined by 42% year on year to N232.47 billion from N400.67 billion. Overall, profit after tax declined by 45.2% to N147.36 billion from N181.62 billion. #MTN Nigeria Declines in Value After Earnings Slump No Shortage of Naira Notes, CBN Assures Nigerians