MTN Nigeria and Airtel Africa are expected to return to profitability in 2025 following significant FX losses due to naira devaluation. Despite mixed revenue performance, MTN’s strong gains in data and voice revenues contrast with Airtel’s recent decline. Strategic adjustments and operational efficiency are key to their recovery.
MTN Nigeria and Airtel Africa Plc, two leading telecom companies listed on the Nigerian Exchange (NGX), are projected to return to profitability by 2025. This prediction comes in light of significant foreign exchange (FX) losses impacting their financial performance due to the devaluation of the Nigerian naira. MTN Nigeria reported over N925 billion in FX losses for FY 2024, hindering its balance sheet quality.
Airtel Africa experienced a substantial reduction in FX losses to $153 million in 9M FY 2025, a decline from $903 million in the previous year. CSL Stockbrokers Limited believes that the worst is over for these telecom operators and expects them to regain profitability in 2025. However, the performance diverged between the two companies, with MTN reporting a 36% year-on-year increase in revenue to N3.36 trillion while Airtel faced a 5.8% decline in revenue, down to $3.66 billion.
The revenue growth for MTN was driven primarily by increases of 49.1% in data and 14.5% in voice segments, contrasting with Airtel, which saw drops in both data and voice revenues due to challenging market conditions. Analysts cited rising operational expenses from high inflation, energy costs, and continued currency devaluations as core obstacles to profitability in the telecom sector. MTN’s operational costs surged by 88.1% year-on-year, highlighting these pressures.
To address FX exposure, MTN renegotiated tower lease agreements, transitioning to mostly naira-based terms and minimizing US dollar dependencies. This strategic shift contributed to a quarterly profit of N114.49 billion in Q4 2024, a recovery from the significant loss of N454.60 billion in the same quarter of the previous year.
Meanwhile, Airtel’s strategies for localizing its foreign debt led to marked reductions in FX losses and reporting a profit of $248 million in 9M FY 2025, a significant improvement from a mere $2 million in the prior year. CSL Stockbrokers highlighted factors contributing to a positive outlook, including a rebound in mobile subscriptions, tariff hikes, network expansion, and increased digital penetration.
In summary, MTN Nigeria and Airtel Africa are set to rebound to profitability by 2025 after suffering substantial FX losses due to naira devaluation. MTN shows robust revenue growth driven by data and voice services, while Airtel is recovering through efficient cost management and debt localization. Analysts cite favorable market factors and strategic adjustments as key to this optimistic forecast.
Original Source: dmarketforces.com
