First Loss in Seven Years

MTN Group Ltd. (JSE:MTN), Africa’s largest wireless carrier by revenue, has reported its first loss since 2016. The company recorded a loss of 7.39 billion rand ($414.7 million) for the six months ending June, compared to a profit of 4.14 billion rand during the same period last year. This marks a significant financial setback for MTN, coinciding with the payment of a substantial fine imposed by the Nigerian government.

Impact of Naira Devaluation

The devaluation of the Nigerian naira has been a primary factor in MTN’s financial woes. Since President Bola Tinubu’s administration began implementing economic reforms in May 2023, the naira has lost over 70% of its value against the dollar. With MTN generating about a third of its earnings from Nigeria, this currency slump has severely impacted its income. MTN CEO Ralph Mupita has indicated that the naira’s volatility is expected to stabilize in the third to fourth quarter of 2024.

Effects of Currency Fluctuations in Other Markets

In addition to Nigeria, MTN’s earnings were affected by currency devaluations in other markets, including South Sudan. The company is also facing challenges in Iran, where it holds around 3 billion rand in dividends that are inaccessible due to US sanctions. MTN owns a 49% stake in MTN IranCell and has investments in Snapp, an Iranian ride-hailing service.

Customer Growth and Market Exits

Despite these challenges, MTN increased its total customer base by 0.8% to 288 million. However, the company faced declines in user numbers in Afghanistan and Sudan due to conflict and instability. MTN is planning to exit markets in Guinea Conakry and Guinea-Bissau, with Telecel making an acquisition offer for these units. Additionally, MTN intends to reduce its stake in the Nigerian market to 65% through sales to local shareholders.

Future Strategies and Growth Opportunities

Looking ahead, MTN aims to drive future growth through its data and fintech businesses. The company plans to spin off its infrastructure units, particularly its fiber operations, to create opportunities for co-investment with third parties. This move is expected to accelerate investment in infrastructure and support long-term growth.

Stock Performance and Outlook

Following the announcement, MTN shares rose 0.8% to 89.32 rand as of 3:03 p.m. in Johannesburg. Despite the recent financial setback, the company’s strategic adjustments and focus on emerging growth areas may provide a pathway to recovery and enhanced investor confidence.

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