In a recent report released on the Nigeria Exchange Limited (NGX), MTN Nigeria Plc revealed a staggering forex loss of N740 billion in its financial year 2023. The adverse impact of this loss is evident in the company’s financial performance, as it reported a loss before tax of N177.8 billion, a sharp contrast to the pre-tax profit of N518.8 billion in the previous year.
The audited results for the year ended December 31, 2023, paint a challenging picture for MTN Nigeria, showing a loss after tax amounting to N137 billion, in stark contrast to the restated Profit After Tax (PAT) of N348.7 billion reported in 2022.
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The significant devaluation of the naira in 2023 played a crucial role in the substantial net forex loss of N740.4 billion (compared to N81.8 billion in 2022). This was reflected in net finance costs, resulting in a reported loss after tax of N137 billion.
MTN attributed these financial challenges to the Central Bank of Nigeria’s changes in forex operations announced on June 14, 2023. The collapse of all market segments into the investor and exporter window, along with the reintroduction of the ‘willing buyer, willing seller’ model, led to a 96.7 percent movement in the exchange rate, reaching N907/US$ (NAFEM rate) at the end of December 2023.
The impact of this exchange rate movement was particularly felt in MTN’s operating expenses and net finance costs. Tower lease costs, comprising a significant portion of the company’s foreign currency exposure, were notably affected.
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CEO Karl Toriola acknowledged the challenging operating environment in 2023, characterized by rising inflation, currency devaluation, and foreign exchange shortages. Inflation reached 28.9 percent in December 2023, the highest in 18 years, with an average rate of 24.5 percent.
To navigate these challenges, MTN continued to invest in network infrastructure, emphasizing value-based capital allocation and efficiencies. Despite the headwinds, the company aimed to meet the growing demand for data and accelerate the growth of its commercial operations.
Source: Vanguard
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