First Loss in Seven Years

MTN Group Limited (JSE:MTN), Africa’s leading mobile network operator by revenue, has reported its first loss since 2016. The company incurred a loss of 7.39 billion rand ($414.7 million) in the six months ending June, compared to a profit of 4.14 billion rand in the same period last year. This significant financial setback for MTN coincides with the payment of a substantial fine levied by the Nigerian government.

Impact of Naira Devaluation

The depreciation of the Nigerian naira has been a major contributing factor to MTN’s financial difficulties. Since President Bola Tinubu’s administration initiated economic reforms in May 2023, the naira has lost more than 70% of its value against the dollar. As MTN generates approximately one-third of its earnings from Nigeria, this currency slump has had a substantial impact on its revenue. MTN CEO Ralph Mupita has stated that the naira’s volatility is anticipated to stabilize in the third to fourth quarter of 2024.

Effects of Currency Fluctuations in Other Markets

Beyond Nigeria, MTN’s earnings have been affected by currency devaluations in other markets, including South Sudan. The company is also facing challenges in Iran, where it holds approximately 3 billion rand in dividends that are inaccessible due to US sanctions. MTN owns a 49% stake in MTN IranCell and has investments in Snapp, an Iranian ride-hailing service.

Customer Growth and Market Exits

Despite these challenges, MTN saw its total customer base increase by 0.8% to 288 million. However, the company experienced declines in user numbers in Afghanistan and Sudan due to conflict and instability. MTN is planning to exit markets in Guinea Conakry and Guinea-Bissau, with Telecel making an acquisition offer for these units. Additionally, MTN intends to reduce its stake in the Nigerian market to 65% through sales to local shareholders.

Future Strategies and Growth Opportunities

Moving forward, MTN aims to drive future growth through its data and fintech businesses. The company plans to spin off its infrastructure units, particularly its fiber operations, to create opportunities for co-investment with third parties. This move is expected to accelerate infrastructure investment and support long-term growth.

Stock Performance and Outlook

Following the announcement, MTN shares rose 0.8% to 89.32 rand as of 3:03 p.m. in Johannesburg. Despite the recent financial setback, the company’s strategic adjustments and focus on emerging growth areas may provide a path to recovery and increased investor confidence.