MTN, Africa’s largest wireless carrier by revenue, has reported its first financial loss since 2016. The company posted a loss of R7.39 billion for the first half of 2024, a significant drop compared to the R4.14 billion profit recorded during the same period last year. This loss is primarily attributed to the sharp devaluation of the Nigerian naira, one of MTN’s key markets.
The last time MTN faced a similar financial setback was in 2016 when the company was fined over $1 billion by the Nigerian government for failing to disconnect unregistered SIM cards. This latest loss marks a significant turning point for the company, which has enjoyed steady profits for the past eight years.
The decline in MTN’s earnings is closely tied to the economic challenges in Nigeria. Since President Bola Tinubu took office in May 2023, the Nigerian naira has lost more than 70% of its value against the US dollar. This steep devaluation is a result of President Tinubu’s economic reforms, including changes to the country’s foreign exchange policies. As a result, MTN, which derives about a third of its earnings from Nigeria, has seen its revenue from the country drastically reduced.
MTN’s operations in Nigeria are significant, with around 77 million customers in the country. Nigeria is Africa’s most populous nation, making it a critical market for the company. However, the recent devaluation of the naira has made it more challenging for MTN to maintain its revenue levels.
In response to these financial pressures, MTN is considering a strategic shift in its operations. The company is in talks to exit some of its smaller markets, including its unit in Guinea Conakry. Additionally, MTN plans to reduce its stake in its Nigerian business, aiming to lower its ownership to as little as 65%. This reduction would be achieved by selling shares to local investors in Nigeria.
MTN CEO Ralph Mupita discussed these plans during a call with reporters, highlighting the company’s focus on streamlining its operations and adapting to the economic challenges it faces in Nigeria. By reducing its stake in Nigeria, MTN hopes to mitigate the financial risks associated with the country’s economic instability.
Despite these challenges, MTN remains a significant player in the African telecommunications market. The company’s market capitalization stands at R167.04 billion, and it continues to provide services to millions of customers across the continent. However, the recent loss serves as a reminder of the economic vulnerabilities that companies like MTN face when operating in markets with volatile currencies and unpredictable economic policies.
As MTN finds its way out of these challenges, the company’s leadership is focused on maintaining its position in the market while adapting to the changing economic landscape. The decision to exit some markets and reduce its stake in Nigeria reflects a broader strategy to stabilize the company’s financial position and ensure long-term growth.
MTN’s first loss in eight years underscores the impact of Nigeria’s economic reforms on the company’s operations. As the company looks to the future, it will need to continue adapting its strategy to navigate the challenges posed by currency fluctuations and economic instability in key markets like Nigeria.
