MTN Nigeria stock price hit as naira devaluation inflcits another loss

The Nigerian unit of MTN Group Ltd fell the most in 10 months in Lagos before recovering, as investors reacted to a second year of loss caused by a sharp devaluation of the naira.

Shares in MTN Nigeria Communications Plc retreated 9.1% to a low of 240 naira, the most since April 24, 2024, before rebounding to trade unchanged on the session.

The Nigerian unit declared a net loss of 399.45 billion naira($266 million) for the year through December compared to a 133. 8 billion naira loss in 2023. It blamed “forex losses arising from the revaluation of foreign-currency denominated obligations.”

Read also: Here’s what to know as MTNN reports N400.4bn FY’24 loss

The naira lost around 40% of its value in 2024 following currency reforms to loosen its peg against the dollar, though it has been relatively stable since early December.

“The company has had significant challenges with its cost lines,” said Matilda Adefalujo, equity analyst at Meristem Securities in Lagos.

MTN Nigeria’s operating expenses jumped by 76.6% while its margin on earnings before interest, taxes, depreciation, and amortization shrank by 9.6% percentage points.

The company, Nigeria’s biggest telecoms firm, said recent government permission to increase tariffs would lift service revenue growth and the EBITDA margin to “at least mid-40%” in 2025.

“The increase in tariff and relative stability of the naira should be able to bring MTN back to profitability,” Adefalujo said.