MTN Nigeria Communications Plc, one of the leading telecommunications companies in the country, has seen its cash generated from operations rise to the highest in at least seven years, data compiled by BusinessDay shows.
According to the company’s latest audited financial statement, it generated N1.37 trillion cash from operations last year from N1.14 billion in 2022.
The telco reported an after-tax loss of N137 billion due to foreign exchange loss in 2023 (N740.4 billion). It is the first loss since it was listed on the Nigerian Exchange Limited in 2019.
Approximately 83 percent of the substantial FX losses remain unrealised, according to Modupe Kadri, chief financial officer at MTN Nigeria, who highlighted the potential reversal if the naira strengthens and favourable government policies are enacted.
“Though the losses appear to be huge, they’re unrealised so if the naira recovers, that will be reversed. 83 percent of that amount is unrealised, which means it is non-cash. If the government gets the policies right, we should be able to see a recovery from those reserves,” he said in an interview.
The FX loss affected the company’s retained earnings and shareholders’ equity, which stood at negative of N208 billion and N40.8 billion respectively by the end of December 2023.
“Last year witnessed a very challenging operating environment characterised by rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in the first quarter arising from a redesign of the naira,” Karl Toriola, CEO at MTN Nigeria, said in a statement.
“These factors created severe headwinds for our customers and our business during the year. The inflation rate increased throughout the year, reaching 28.9 percent in December 2023 – the highest reading in 18 years – with an average rate of 24.5 percent,” he said.
He added that 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 percent and 257.1 percent in 2023 to N1,416.8/litre and N600/litre, respectively.
Further findings from the company’s statement showed that Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) grew by 12.3 percent to N1.2 trillion. EBITDA margin declined by 4.5 percentage points to 48.7 percent.
It recorded a 5.3 percent rise in total subscribers to 79.7 million, a 12.7 percent increase in active data users and a 163.2 percent surge in active mobile money wallets to 5.3 million.
Fintech revenue also saw a modest 2.4 percent increase to N86.4 billion.
“In light of the ongoing volatility in key macroeconomic variables, particularly the naira exchange rate, we have suspended our medium-term guidance for EBITDA margins. We, however, remain committed to accelerating service revenue growth,” the statement said.
“We continue to see compelling growth opportunities in the market and remain focused on executing on initiatives that will restore earnings and cashflow growth over the medium term,” it added.
