MTN Group CEO Ralph Mupita believes the worst is over for MTN in Nigeria as the company recovers from significant losses due to naira devaluation. Despite challenges from inflation and high costs, initiatives like renegotiated tower leases aim to restore profitability. Meanwhile, operations in Sudan have faced setbacks from armed conflict. Overall, MTN is optimistic about future performance, especially in Nigeria.
Ralph Mupita, CEO of MTN Group, indicated that the company is on the road to recovery in Nigeria following a significant naira devaluation, which led to an annual pre-tax loss of R4.4 billion. Nigeria’s chronic dollar shortages have necessitated this devaluation as part of broader government measures aimed at stabilizing the currency and attracting investment. The combination of high inflation and interest rates has escalated operational costs, exacerbating MTN Nigeria’s pre-tax loss, which increased over 200% to ₦550.3 billion (R6.4 billion).
At the group level, MTN reported a pre-tax loss of R4.4 billion for the year ending December 31, a stark contrast to the prior year’s profit of R12.2 billion. To address its financial predicament, MTN Nigeria is undertaking various initiatives, including renegotiating tower leases and implementing a tariff hike approved in January. Mupita expressed optimism, noting, “That pain which we’ve had for 18 months, is abating somewhat… the business is growing very strongly. So I’m actually very bullish and confident that we’ll see strong recovery in Nigeria” during a media briefing.
MTN Group, serving 291 million customers across 16 African markets, successfully cut costs by R3.8 billion, with R1.2 billion stemming from the renegotiated tower leases, according to CFO Tsholofelo Molefe. However, the ongoing armed conflict in Sudan compromised the group’s operational and financial performance, resulting in impairments of R11.7 billion. Despite these challenges, Mupita noted that MTN is gradually restoring services, with some sites coming back online in conflict-affected areas, such as Khartoum, where operations had ceased since April 2023.
Analysts have observed that while MTN’s overall service revenue declined by 15% to R177.8 billion, it increased by 14% in constant currency terms. Peter Takaendesa from Mergence Investment Managers remarked, “If you look at the underlying performance, which is service revenue at constant currency, it does look strong. The management team is executing well,” highlighting that macroeconomic and currency challenges remain largely beyond the company’s control.
MTN Group is navigating a recovery phase in Nigeria despite facing significant losses attributed to currency devaluation and economic instability. The company is implementing strategic initiatives to restore profitability and has managed to reduce costs significantly. While the situation remains challenging, especially in Sudan, the group is optimistic about its operational performance and believes a strong recovery is achievable in its largest market, Nigeria.
Original Source: techcentral.co.za
