MTN Group, Africa’s largest telecommunications operator, is set to report a significant half-year loss, primarily due to the devaluation of the Nigerian naira and operational difficulties in Sudan. The South Africa-based company, with a customer base of 288 million across 18 African markets, has announced that it expects its headline earnings per share (HEPS) to fall to a loss of between 217 cents and 271 cents for the six months ending June 30. This marks a stark contrast from the 542 cents profit recorded during the same period last year.
The devaluation of the Nigerian naira against the U.S. dollar has driven up both operating and net finance costs for MTN Nigeria, the company’s largest market. MTN stated that this currency devaluation would reduce group results by 90 cents, while foreign exchange losses from the Nigerian unit are estimated to knock off an additional 389 cents. Furthermore, a decrease in the value of most local currencies is expected to impact the company’s results, which are reported in South African rand.
Operational challenges in Sudan have compounded MTN’s financial woes, leading to losses in its unit there. The company is struggling with the fallout from conflict in the region, which has significantly disrupted its operations. MTN is scheduled to report its first-half results on August 19.
Despite these setbacks, MTN’s Nigerian unit has made some strategic moves to mitigate risks. The unit has successfully renegotiated local lease agreements with tower operator IHS, extending existing contracts until the end of 2032. According to MTN, the renegotiated terms are designed to address macroeconomic risks affecting MTN Nigeria, support margin recovery, and resolve its negative equity position.
Additionally, MTN Nigeria and IHS have reached an agreement with American Tower Corporation (ATC) regarding approximately 2,500 sites awarded to ATC from IHS’s portfolio. Under this agreement, ATC will provide tower services at up to 2,100 sites, while IHS will manage up to 1,400 sites. This includes 1,000 new MTN sites that will be shared by the two tower companies.
The financial performance of MTN Nigeria, which contributes significantly to the group’s earnings, has been severely impacted by the naira’s devaluation. This currency devaluation has led to higher operating costs and substantial foreign exchange losses, further straining the company’s financial health. MTN Nigeria has been working diligently to counteract these challenges through strategic negotiations and partnerships.
MTN’s operations in Sudan have also been adversely affected by ongoing conflicts. The instability in Sudan has not only disrupted MTN’s business activities but has also led to operational losses. The company is actively seeking ways to navigate these challenges and stabilize its operations in the region.
