MTN Nigeria incurred a loss within the first quarter of 2023 as the bottom line yielded a negative N393 billion, its financials showed Tuesday upon release.
Like it was at the end of last year, the company’s financial position stayed in the red, with liabilities 12.6 per cent higher than assets this time around.
Shareholders’ fund, which turned negative at the end of last year, soared nearly ten times to N434.7 billion in just three months, heaping pressure on MTN Nigeria to urgently seek additional capital to clean its balance sheet.
The net loss indicates that the Nigerian operation of Africa’s biggest telecom company by revenue and subscriber base is not yet out of the woods after headwinds from exchange rate volatility for most of 2023 left net income and equity in the red last December.
Business activities were a sail through choppy waters for MTN Nigeria in the first quarter of the year as a devaluation of the naira in January set the local currency up for a descent to its weakest level ever in March while price levels soared to their peak in 28 years a month after, driving up operating expenses.
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“The operating environment in the first quarter remained very challenging, with rising inflation and continued naira depreciation off an already low base,” said Karl Toriola, MTN Nigeria’s chief executive.
The helmsman gave the hint that cost efficiency and prioritisation of “value-based capital allocation” will govern spending going forward.
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At N753 billion, turnover jumped about one-third higher compared to the 2023 level as income from data sales more than doubled to surpass the cash earned from voice services as the company’s top revenue source.
Subscribers dropped by two million quarter on quarter for what MTN Nigeria, in a separate document, said resulted from an order by the Nigerian Communications Commission asking telcos to link users’ SIM cards to their National Identification Number.
All operating expenses jumped, the principal among which was direct network operating costs which climbed by more than four-fifths to N252.8 billion, leaving operating profit 15.7 per cent weaker.
The company’s net foreign exchange loss ballooned from N4.5 billion a year ago to N656.4 billion as its payment obligations, mostly denominated in the dollar, surged in naira terms. The naira is the currency in which the telco generates the bulk of its income.
That, combined with a more-than-double surge in finance cost, drove pre-tax loss to N575.7 billion compared to a positive position of N162.9 billion in the same period of 2023.
MTN Nigeria got N183 billion in tax credit from fiscal authorities as a partial succour for its financial distress, helping pare net loss to N393 billion in contrast to the N108.4 billion reported a year before.
The wireless carrier said it is in talks with authorities to hike tariffs and will cut back on capital spending (excluding leases) and also lower its US dollar exposures as part of the broad measures to address its negative asset position.
MTN Nigeria’s shares have shed 25 per cent since the year began compared to an average return of 30.9 per cent for other stocks listed on the Nigerian Exchange.
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