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MTN Nigeria incurs N740bn forex losses

A loss before tax of N177.8 billion has been reported by MTN Nigeria Plc. Since it became a quoted company in Nigeria, this is the…

A loss before tax of N177.8 billion has been reported by MTN Nigeria Plc.

Since it became a quoted company in Nigeria, this is the company’s first-ever loss.

A year earlier, it recorded a pre-tax profit of N518.8 billion.

The losses resulted in a wipe-out of shareholders’ funds.

According to MTN, the losses were as a result of a massive foreign currency loss of N740 billion up from N81 billion reported in 2022.

“The loss was significantly due to operational changes to the Nigerian Foreign exchange market, including the abolishment of the segmented/parallel structure announced by CBN in June 2023,”MTN said.

The Nigerian Autonomous Foreign Exchange Market (NAFEM) exchange rate of N907.11/$1 as of 31 December 2023 was used.

This suggests that the losses could be wider if the current exchange rate between the naira and dollar persists by the end of March when it publishes its Q1 results.

The company said: “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.

“These factors created severe headwinds for our customers and our business during the year. The inflation rate increased throughout the year, reaching 28.9% in December 2023 – the highest reading in 18 years – with an average rate of 24.5%.

“This was further exacerbated by higher fuel prices, arising from the removal of the fuel subsidy in May 2023, with the average prices of diesel and petrol up by 66.4% and 257.1% in 2023 to N1,416.8/litre and N600/litre, respectively. In June 2023, the Central Bank of Nigeria (CBN) adopted a more liberal foreign exchange management system and reintroduced the ‘willing buyer, willing seller’ model.

“This has resulted in a 96.7% unfavourable movement in the exchange rate against the US dollar from N461.1/US$ in December 2022 to N907.1/US$ (Nigerian Autonomous Foreign Exchange Market (NAFEM) rate) in December 2023.

“This development contributed meaningfully to the upward pressure on the cost of doing business in Nigeria, and for MTN Nigeria in particular, significantly increased the costs in relation to our tower leases.”

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