The market value of MTN Nigeria Plc fell precipitously below N4 trillion, making it the latest fallen angel in the stock market. In its prosperous days, the telecom company had led the Nigerian Exchange market mover category.
Due to lower-than-normal sentiment, MTN Nigeria has lost more than 35% of its market worth in the last seven trading sessions on the local exchange. The company’s report states that management disclosed possible foreign exchange losses in 2024, raising doubts about the company’s future.
The economy has recently put pressure on its profitability, which has hurt investors’ enthusiasm in purchasing the telecom company. Then, investors withdrew their shareholdings after the 2023 financial scorecard delivered a severe blow.
MTN Nigeria’s market value fell to N3.84 trillion, based on data that MarketForces Africa monitored. Due to negative fluctuations in exchange rates, the telecom giant’s exposure to foreign currency liabilities negatively impacted its balance sheet, resulting in a loss of almost N740 billion.
On the Nigerian Exchange in the early months of 2024, MTN Nigeria overtook Dangote Cement and Airtel Africa as its market capitalization gradually increased to approximately N6 trillion. In a letter, MTN Nigeria stated that 2024 will be difficult and that there’s a chance the telecom business may see further foreign exchange losses. In 2023, the company reported a net loss of N137 billion.
According to MTN Nigeria’s prediction, the depreciation of the naira and growing inflation will make 2024 difficult. The telecom attributed the expectation to inflation and exchange rate pressures in particular.
“This is anticipated to put additional pressure on consumers, the cost of doing business and further potential forex losses”, the management said in a note submitted to the market.
On the regulatory front, MTN Nigeria said it has deployed additional resources at its service outlets and provided alternative channels to drive compliance with NCC’s NIN-SIM directive and ensure as many customers as possible are properly registered.
“We remain engaged with the relevant authorities to accelerate the verification process and minimise service disruptions to our base as well as the potential impact on our revenue.
“As we continue to execute on our commercial strategies to expand our subscriber base and drive usage, we also remain engaged with authorities on tariff adjustments through the telecom industry body”.
It added that given the elevated volatility in its trading environment – particularly inflation, energy costs and exchange rates – an appropriate pricing level is required for the industry to support its sustainability and ability to continue investing in networks.
“We are committed to sustaining investment in the growth of our business, particularly to accelerate topline growth to mitigate the near-term pressures bearing on our operations.
“Our disciplined focus on unlocking further expense efficiencies will help to drive the underlying operating leverage in the business to restore profit growth over time”.
For MoMo PSB, MTN Nigeria said it will continue to drive consumer education and awareness, leveraging our distribution network, which has enabled us to grow the active wallets and scale the agent and merchant ecosystem.
“Additionally, we are expanding the bouquet of services from basic to advanced services, including cross-border remittances, to boost adoption and monetisation. We will leverage the momentum from Q4 to accelerate the growth of wallets and adoption of services as we expand our merchant ecosystem.
“The devaluation of the naira has had a material impact on our financial position, resulting in the reported loss and depleted reserves. Therefore, in addition to accelerating service revenue growth, we have progressed constructive discussions with IHS on changes to the existing tower.”.
