MTN profits plummet after Nigeria forex hit

MTN showed strong revenue growth in its 2023 financial year, but profit plummeted as the company took a massive hit from its Nigerian operations.

MTN released its results for the year ended 31 December 2023 today, which revealed poor earnings for the telecoms giant.

Revenue showed strong growth of 6.8% to R221 billion from R207 billion the year prior. 

MTN’s total subscribers increased by 2.0%  in 2023 to 294.8 million.

However, the company’s profit after tax fell by over 83% to R4.02 billion from R23.85 billion in 2022.

Basic earnings per share (EPS) decreased by 78.5% to 227 cents per share, and headline earnings per share (HEPS) were down by 72.3% to 315 cents.

“The MTN Group sustained a resilient performance in 2023, with solid underlying operating momentum and pleasing progress in our key strategic initiatives during a period characterised by geopolitical and macroeconomic headwinds,” CEO Ralph Mupita said. 

“The sharp devaluation of the Naira during the period impacted our reported results for both MTN Nigeria and MTN Group.”

During the 2023 financial year, the naira devalued from ₦461 to ₦907 against the US dollar.

This led to foreign exchange losses of ₦740 billion (R20.98 billion) being recognised in MTN Nigeria – almost as much as the company’s net profit in 2022.

These losses include ₦367 billion (R10.61 billion) unrealised forex losses on leases.

“We continued to invest in our business and execute on our Ambition 2025 strategy given the sustained structural high demand for data and fintech services evident across our markets,” Mupita said.

He said data traffic across MTN’s operations grew at 26.3% (35.4% excluding JVs), while fintech transaction volumes grew at 32.2% in the period.

The company invested heavily in its business in the period, deploying R41.1 billion of capex (ex-leases) to support the execution of its Ambition 2025 strategy. 

“The progress of MTN South Africa’s network resilience plan was a key success in the year, which significantly improved network availability and supported commercial initiatives despite ongoing load-shedding,” Mupita said. 

By the close of 2023, MTN SA had achieved network availability of approximately 95% ahead of schedule, with availability of approximately 98% on the cohort of sites where resilience investment had been completed.

MTN declared a final dividend of 330 cents per share, unchanged from the previous year.

Notably, this dividend is higher than the company’s basic earnings per share. Dividends are usually paid with a company’s profits but are less volatile than a company’s earnings.

Therefore, since MTN’s earnings dropped but it wants to keep its dividend unchanged from 2022, its 2023 dividends will be paid out of the company’s cash reserves.