MTN Records First Loss in Seven Years Due to Naira Devaluation

MTN Group Ltd., Africa’s largest wireless carrier by revenue, has reported its first loss in seven years due to the steep devaluation of the Nigerian naira.

The company announced a loss of 7.39 billion rand ($414.7 million) for the first half of 2024, a stark contrast to the 4.14 billion rand profit it recorded during the same period last year.

The loss marks MTN’s first since 2016, when the company was hit with a massive fine exceeding $1 billion by the Nigerian government.

This time, however, the company’s financial setback is largely attributed to the economic challenges in Nigeria, one of its most critical markets.

Since President Bola Tinubu took office in May 2023, the naira has depreciated by more than 70% against the U.S. dollar, severely impacting MTN’s revenue in the region.

Nigeria, Africa’s most populous nation, contributes nearly a third of MTN’s total earnings, making the devaluation a significant blow to the company’s overall financial health.

Currency devaluations in other African markets, such as South Sudan, have also compounded MTN’s financial difficulties.

Despite these challenges, the group managed to increase its total customer base by 0.8%, bringing its total number of subscribers to 288 million.

However, the ongoing conflict in Sudan and MTN’s recent exit from Afghanistan have led to a decline in users in those regions.

MTN’s Chief Executive Officer, Ralph Mupita, revealed that the company is considering further exits from specific markets as part of its strategy to stabilize operations.

The company is currently in discussions to divest from its Guinea Conakry unit and plans to reduce its stake in the Nigerian business to as low as 65% by selling shares to local investors. MTN currently holds a 73% stake in its Nigerian operations, according to data compiled by Bloomberg.

Despite the financial challenges, MTN remains committed to its long-term growth strategy in Africa. The group continues to focus on expanding its digital and fintech services, which are seen as key drivers of future revenue.

However, the current economic conditions in some of its major markets, particularly Nigeria, underscore the volatility and risks that come with operating in the region.

As MTN navigates these turbulent waters, the company’s ability to adapt to the rapidly changing economic landscape in Africa will be critical to its future success.

Investors and stakeholders alike will be closely watching how MTN manages its operations in Nigeria and other key markets in the coming months.