Telecommunication giant, MTN, put a positive gloss on the eight per cent devaluation of the naira by the Central Bank of Nigeria (CBN), saying the weaker Nigerian currency would also reduce costs in its biggest African market.
Along with Standard Bank, Tiger Brands and Massmart, MTN is one of many South African companies tapping Africa’s largest economy and most populous market.
Nigeria is the biggest of MTN’s 22 operations across Africa and the Middle East and contributed more than a third of the company’s 72.8 billion rand ($6.6 billion) revenue in the first half of this year.
The CBN devalued the naira on Tuesday after Governor Godwin Emefiele admitted plunging oil prices were making it hard to defend the currency.
MTN declined to quantify the impact on its revenues of the devaluation, which was triggered by a sharply weaker interbank naira rate over the last two months. However, it noted that the currency movement would also reduce its costs.
“We endeavour to have as large a portion as possible of our costs in each operation denominated in local currency, which would in turn offer some protection against the currency movement,” it said in a statement.
Although the naira is near a record low against the dollar, it is faring slightly better against South Africa’s rand , MTN’s reporting currency.
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The naira has weakened nearly 7 percent against the rand this year, hitting a low of 16.23 naira this week, its softest since October 2013, but is still relatively strong compared to levels above 23.50 seen in 2011.
At its first-half earnings in August, MTN said rand weakness against the naira had supported group revenues.
MTN shares closed down 0.4 percent at 225.66 rand.
