MTN Nigeria Communications Plc (MTN Nigeria) recently announced its audited results for the year ended December 31, 2023.
The company reported loss after tax (LAT) of N137 billion due to net forex loss. Its profit after tax (PAT) adjusted for the net forex loss decreased by 14.3percent to N344.5 billion.
MTNN net loss for the year 2023 has resulted in a depletion of its retained earnings and shareholders’ fund to negative of N208 billion and N40.8 billion respectively.
Read also: Naira devaluation: MTN records first loss in 6 years
In light of the negative retained earnings, the board did not recommend a final dividend for full year 2023.
The significant devaluation of the naira in 2023 resulted in a materially higher net forex loss of N740.4 billion (2022 restated: N81.8 billion), reflected within net finance costs, which resulted in a reported loss after tax of N137billion compared to a restated PAT of N348.7 billion in 2022.
MTNN total revenue of N2.468trillion in 2023 as against N2.012trillion in 2022 represents year-on-year (YoY) increase by 22.7percent.
Adjusting for the net forex loss, PAT would have been N344.5 billion (down by 14.3percent). Notwithstanding these movements, MTNN is has maintained strong free cash flow generation (up 11.6percent year-on-year (YoY) to N631.6 billion), demonstrating the underlying strength of its business.
In 2023 financial year, MTNN total subscribers increased by 5.3percent to 79.7 million; active data users increased by 12.7percent to 44.6 million; active mobile money (MoMo PSB) wallets increased by 163.2percent to 5.3 million; service revenue increased by 22.4percent to N2.5 trillion; earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 12.3percent to N1.2 trillion.
EBITDA margin decreased by 4.5 percentage points (pp) to 48.7percent; while earnings per share (EPS) declined to negative of N6.38 kobo (N16.56 kobo adjusted for the net forex loss, down 14.1percent).
Also, the company’s capital expenditure (capex) increased in 2023 by 13.2percent to N571.0 billion (up 24.5percent to N449.3 billion, ex-leases). Free cash flow increased by 11.6percent in 2023 to N631.6 billion.
In FY 2023, MTNN recorded a forex gain of N93.8 billion (58.3percent unrealised) from the revaluation of its financial assets and a forex loss of N834.3 billion (82.8percent unrealised) from the revaluation of its financial liabilities.
These led to the reported net foreign exchange loss of N740.4 billion in 2023, bringing MTNN “net finance costs” to N951.5 billion, up 341.9percent. This resulted in the reported loss after tax of N137billion and a depletion of the company’s retained earnings and shareholders’ funds to negative N208 billion and N40.8 billion, respectively.
Read also: Headline earnings at MTN group to slump 60-80% on naira devaluation
Excluding the net forex loss, “net finance costs” increased by 58.1percent to N211.1 billion due to higher borrowings costs and interest rates.
MTNN anticipates a challenging 2024 as it tackles the complexity and ongoing effects of high inflation and elevated forex volatility on its operations.
Given the material uncertainty these present in the near term, MTNN has suspended its medium-term guidance for EBITDA margins. Though it maintains the medium-term guidance for service revenue.
Looking forward, MTNN remains focused on sustaining its commercial momentum and accelerating its service revenue growth, improving the profitability of the business and strengthening the balance sheet.
Since December 2023, it has progressed constructive discussions with IHS on changes to the existing tower lease contracts that could, if successful, result in improvements that help the company mitigate macro risks, including currency.
As the company executes its strategy, it will continue to invest in the business and unlock efficiencies to drive operating leverage with a focus on re-establishing earnings growth as well as sustaining its strong free cash flow generation and returns.
