Foreign Currency

Nigeria’s forex crisis adds MTN to growing list of financially distressed companies


MTN Nigeria joined the expanding list of financially distressed companies in the country after its entire shareholders’ fund was obliterated by a sweeping after-tax loss precipitated by a dollar scarcity in Africa’s biggest economy.

The wireless carrier, which executes the majority of its transactions with trade partners in foreign currencies, incurred N740 billion in net foreign exchange loss last year following sharp jumps in the rates of exchanging the naira for the dollar.

That turned its shareholders’ fund into a negative figure of N40.8 billion, with liabilities totalling N3.230 trillion and assets summing up to N3.188 trillion.

“2023 witnessed a very challenging operating environment characterised by rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in Q1 arising from a redesign of the naira,” CEO Karl Toriola said in a statement.

“These factors created severe headwinds for our customers and our business during the year.”

MTN Nigeria reported a net loss of N137 billion compared to a net profit of N348.7 billion one year prior.

The abysmal performance of MTN Nigeria, the local unit of Johannesburg-based Africa’s biggest wireless service provider by revenue, had far-reaching implications for the operations of its parent company MTN Group, whose profit slumped by 90 per cent on account of the development.

MTN Nigeria contributes about one-third of the group’s revenue.

“Most of the naira weakness will affect 2024, more than 2023, and it will take some time for MTN to recoup cost pressure from the consumer given regulatory restrictions in Nigeria,” Bloomberg quoted Peter Takaendesa, head of equities at Cape Town-based Mergence Investment Managers, as saying.

2023 has been an unprecedented year for Nigeria in terms of the number and the prestige of the companies financially strained as a result of the value of their liabilities exceeding their assets.

READ ALSO:MTN suffers outage in Nigeria, gives reason

Big corporations including Nestle Nigeria and PZ Cussons Nigeria recorded negative net asset positions for the year under review in mark of an increasingly difficult operating environment for foreign investors in Nigeria.

MTN Nigeria said its customer base grew 5.3 per cent to 79.7 million during the year, while active data users rose 12.7 per cent to 44.6 million.


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