MTN Nigeria’s stock dropped 9.1% due to a substantial loss of 399.45 billion naira for 2024, largely caused by naira devaluation. This marked the company’s largest decline in ten months. However, it anticipates recovery through government-approved tariff increases and hopes for EBITDA margins to reach mid-40% in 2025.
The stock price of MTN Nigeria Communications Plc experienced its largest decline in ten months in Lagos, following a report of substantial losses attributed to naira devaluation. The company’s shares plummeted by 9.1% to 240 naira, their lowest since April 2024, before stabilizing during trading. MTN Nigeria reported a net loss of 399.45 billion naira ($266 million) for the year ending December 2024, in contrast to a loss of 133.8 billion naira in the previous year, primarily due to significant foreign exchange losses linked to foreign-currency obligations.
The naira has seen a devaluation of approximately 40% in 2024, resulting from currency reforms aimed at loosening the fixed exchange rate against the US dollar, although stability has been observed since December. According to Matilda Adefalujo, an equity analyst at Meristem Securities in Lagos, MTN Nigeria has faced numerous challenges in managing operational costs, with operating expenses surging by 76.6% and a reduction of 9.6 percentage points in its earnings before interest, taxes, depreciation, and amortization (EBITDA) margins.
Despite these challenges, MTN Nigeria anticipates a recovery in service revenue and a return to profitability after receiving government approval to raise tariffs, estimating EBITDA margins will reach “at least mid-40%” in 2025. Adefalujo remarks that, “the increase in tariff and relative stability of the naira should be able to bring MTN back to profitability.”
In conclusion, MTN Nigeria has faced significant financial challenges due to naira devaluation, leading to considerable losses. The company is optimistic about future recovery through tariff increases and improved currency stability, which are expected to enhance service revenue and profit margins in the upcoming year. Strategic financial management will be crucial for ensuring MTN Nigeria’s return to profitability.
Original Source: businessday.ng
