Nigeria’s leading telecommunications operators, MTN Nigeria Communications Plc and Airtel Africa, have embarked on aggressive foreign debt repayment measures to cut down on exposure by repaying approximately $1.2 billion in 2024.
This strategic move aims to mitigate the severe foreign exchange (FX) burdens exacerbated by the naira’s drastic depreciation and position both companies firmly on a path to profitability.
The Central Bank of Nigeria’s (CBN) decision in June 2023 to unify the country’s FX market triggered naira depreciation.
This unification led the local currency to plunge from 471/$ initially to 1043.09/$ by December 2023, further declining to 1512.3/$ by early March 2025.
Consequently, both telecom giants faced unprecedented FX losses totaling $1.56 billion.
In 2023, MTN Nigeria recorded its first loss after tax of N137 billion since listing on the Nigerian Stock Exchange in 2019.
Airtel Africa with a subscriber base of approximately 50.9 million in Nigeria as of March 2024 also posted an $89 million loss after tax for the financial year ending March 2024 due to FX volatility in its Nigerian and Malawian markets.
To proactively address these financial pressures, MTN Nigeria reduced its foreign currency obligations by cutting outstanding dollar-denominated letters of credit from $416.6 million at the end of 2023 to merely $20.8 million by the close of 2024.
Airtel Africa likewise executed repayments totaling $739 million to reduce its foreign currency debt exposure.
Olusegun Ogunsanya, former CEO of Airtel Africa, said the company is strategically committed to mitigating FX risks.
“We will continue to focus on reducing our exposure to currency volatility,” Ogunsanya stated.
Despite the benefits of reducing foreign obligations, MTN Nigeria acknowledged a substantial impact on its financial statements.
The company reported a record revenue of N3.36 trillion for 2024 but registered a loss after tax of N400.44 billion, primarily due to forex losses associated with revaluing foreign-currency obligations.
Without these FX-related losses, the company’s profit after tax would have stood at N247.3 billion.
While Airtel Africa’s revenue declined by 5.78 percent from $3.86 billion to $3.64 billion in its nine-month period ending December 2024, profit rose from $2 million to $248 million.
Indicating an improved financial management and the effectiveness of its debt repayment strategy.
Both telecom operators have also strategically shifted their debt portfolios towards local currency. Airtel Africa increased its local currency debt holdings to 92 percent from 79 percent in the previous year.
MTN Nigeria adjusted its debt structure to 72 percent local currency and 28 percent dollars, improving from the previous year’s 56 percent naira to 44 percent dollar ratio.
MTN further strengthened its liquidity by raising N190 billion through its Commercial Paper Issuance Programme, thereby reducing its overall net debt by 29 percent to N591 billion at the end of 2024.
Also, renegotiation of tower lease agreements with infrastructure giant IHS, yielded MTN operational savings of approximately N113.8 billion.
CEO Karl Toriola stressed MTN’s dedication to operational efficiency, saying, “We will focus on cost savings and implement localization initiatives to reduce FX exposure and operating expenses significantly, ultimately driving margin recovery.”
Experts project that recent regulatory approval for a 50 percent increase in telecom tariffs, combined with MTN and Airtel’s debt reduction and operational efficiency measures, positions Nigeria’s telecommunications sector firmly on a trajectory toward renewed profitability.
