MTN Group Earnings Fall Amid Currency Devaluations

MTN Group has reported its first loss in 8 years, driven by the devaluation of the Nigerian Naira, which has significantly impacted its performance in Nigeria. The South African wireless carrier, serving nearly 300 million customers across 18 African markets, saw its headline earnings per share plummet to 256 cents. The company lost over 7.39 billion rand, equivalent to $414.7 million, in the six months ending June 30, underscoring the critical influence of the Nigerian market on MTN’s overall operations.

This loss comes a year after the company posted impressive operating income gains of over 4.14 billion rand.

Currency Devaluations Weigh Down On MTN Group

MTN Group has over 77 million customers in Nigeria, historically contributing over a third of the company’s total earnings. However, due to currency depreciations, the wireless carrier has had to part ways with its massive profits from the Nigerian market. 

The Nigerian Naira plummeted more than 70% against the dollar in over six months, with many blaming President Bola Tinubu’s foreign exchange and economic reforms for the massive devaluation.

After he took power last year, he hinted that his reforms would hurt the country’s economy, stating that the pain would be short-lived, only that he didn’t specify how long the impacts would last. He removed the fuel subsidies, floated the foreign exchange market, and raised the electricity tariffs, leading to higher living costs for the Nigerian people.

Moreover, South Sudan’s currency devaluations have also impacted MTN’s earnings. The country’s ongoing conflicts between the paramilitary Rapid Support Forces and the nation’s military have resulted in high inflation and a depreciation in its currency.

MTN’s Losses and Gains in H1 2024

While its Nigerian service revenue plummeted by 53%, from R43 billion in H1 2023 to R20.5 billion, MTN still had notable gains in the first half of 2024. For starters,

its overall group service revenue escalated by 12.1%. Moreover, its service revenue in South Africa surged by over 3.3% to R21 billion, beating that of Nigeria’s.

Although MTN exited Afghanistan and saw a drop in Sudan users, its user base rose by 0.8% to 288 million. MTN Chief Executive Officer Ralph Mupita said:

The company is looking to exit more markets and is currently in talks over its Guinea Conakry unit.

MTN CEO Ralph Mupita

He added that the company may reduce its stake in Nigeria’s business to as low as 65% through sales to local shareholders.