MTN Nigeria Falls below N4Trn over Poor Earnings

MTN Nigeria Plc’s market valuation reduced sharply below N4 trillion to become the new fallen angel in the stock market. The telecom company had led the Nigerian Exchange market mover category during its good time.

In the last seven trading session in the local bourse, MTN Nigeria has lost more than 35% of its market valuation due to weaker than usual sentiment. For the company, the outlook remains uncertain as management revealed potential FX losses in 2024, according to its report.

Lately, pressure from the economy has reduced its earnings size which has negatively impacted buying interest in the telecom company.  Then, 2023 financial scorecard dealt a big blow and investors’ pullback on shareholding.

MTN Nigeria’s market valuation dropped to N3.84 trillion, according to data tracked by MarketForces Africa. The telecom giant exposure for foreign currency liabilities damaged the balance sheet after is posted more than N740 billion loss due to negative exchange rate movement.

Early in 2024, MTN Nigeria toppled Dangote Cement, Airtel Africa on the Nigeria Exchange when its market capitalisation inched higher to about N6 trillion.>>> MTN Nigeria Topples Dangote Cement as Market Value Hits N6Trn

MTN Nigeria posted N137 billion net loss in 2023 and the company said in a note that 2024 will also be a challenging year with possibility that the telecom company could see another forex losses.

In its outlook, MTN Nigeria said it expects 2024 to be a challenging year due to the rising inflation and devaluation of the naira. The telecom attributed the expectation to inflation and exchange rate pressures in particular.

“This is anticipated to put additional pressure on consumers, the cost of doing business and further potential forex losses”, the management said in a note submitted to the market.

On the regulatory front, MTN Nigeria said it has deployed additional resources at its service outlets and provided alternative channels to drive compliance with NCC’s NIN-SIM directive and ensure as many customers as possible are properly registered.

“We remain engaged with the relevant authorities to accelerate the verification process and minimise service disruptions to our base as well as the potential impact on our revenue.

“As we continue to execute on our commercial strategies to expand our subscriber base and drive usage, we also remain engaged with authorities on tariff adjustments through the telecom industry body”.

It added that given the elevated volatility in its trading environment – particularly inflation, energy costs and exchange rates – an appropriate pricing level is required for the industry to support its sustainability and ability to continue investing in networks.

“We are committed to sustaining investment in the growth of our business, particularly to accelerate topline growth to mitigate the near-term pressures bearing on our operations.

“Our disciplined focus on unlocking further expense efficiencies will help to drive the underlying operating leverage in the business to restore profit growth over time”.

For MoMo PSB, MTN Nigeria said it will continue to drive consumer education and awareness, leveraging our distribution network, which has enabled us to grow the active wallets and scale the agent and merchant ecosystem.

“Additionally, we are expanding the bouquet of services from basic to advanced services, including cross-border remittances, to boost adoption and monetisation. We will leverage the momentum from Q4 to accelerate the growth of wallets and adoption of services as we expand our merchant ecosystem.

“The devaluation of the naira has had a material impact on our financial position, resulting in the reported loss and depleted reserves. Therefore, in addition to accelerating service revenue growth, we have progressed constructive discussions with IHS on changes to the existing tower”.  

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