MTN Nigeria’s stock fell by 9.1% amid substantial losses due to naira devaluation, reporting a net loss of 399.45 billion naira for 2024. Operating expenses surged significantly while EBITDA margins declined. Analysts remain hopeful that recent tariff increases will support a recovery by 2025.
MTN Nigeria Communications Plc experienced a significant decline in its stock price, plummeting 9.1% to a low of 240 naira—the steepest drop in ten months—before stabilizing. This decrease is attributed to a second consecutive year of losses primarily driven by a depreciation of the naira against foreign currencies. The company reported a net loss of 399.45 billion naira ($266 million) for the year ending December, an increase from the 133.8 billion naira loss in 2023, citing “forex losses arising from the revaluation of foreign-currency denominated obligations.”
The naira has depreciated by approximately 40% in 2024 due to currency reforms, although it has shown relative stability since December. Matilda Adefalujo, an equity analyst at Meristem Securities, noted that MTN Nigeria faces significant operational challenges as the company’s operating expenses surged by 76.6%, leading to a 9.6% decline in its EBITDA margin.
Despite these challenges, MTN Nigeria remains optimistic. The recent government allowance for tariff increases is projected to enhance service revenue growth and improve the EBITDA margin to “at least mid-40%” by 2025. Adefalujo expressed confidence that this tariff increase, combined with stable naira conditions, should facilitate MTN’s return to profitability.
In conclusion, MTN Nigeria has faced considerable financial setbacks due to naira devaluation, resulting in significant losses over the past two years. While the stock experienced a notable drop, there is cautious optimism for future recovery as the company adjusts to tariff increases and changes in currency stability. The coming years may be pivotal for MTN Nigeria as it seeks to regain profitability and stabilize its financial position.
Original Source: businessday.ng
