Ralph Mupita, CEO of MTN Group, believes the worst is over for their Nigeria unit after enduring financial struggles due to naira devaluation, which contributed to a significant pre-tax loss. The company is taking steps to restore profitability, including renegotiating tower leases and increasing tariffs. Despite challenges, there is growing optimism regarding recovery and operational improvements across their markets.
Ralph Mupita, the CEO of MTN Group, has expressed optimism concerning the recovery of the company’s Nigerian unit, indicating that the most difficult phase is behind them. This sentiment follows a significant pre-tax loss attributed to the devaluation of the naira, amounting to R4.4 billion. The naira’s devaluation is part of broader governmental efforts to stabilize the currency amid chronic dollar shortages affecting Nigeria.
The high inflation rate and rising interest costs have further exacerbated challenges for MTN Nigeria, leading to a staggering pre-tax loss of ₦550.3 billion (equivalent to R6.4 billion), which reflects a more than 200% increase compared to previous losses. At the group level, MTN recorded a considerable pre-tax loss for the year ending December 31, reporting R4.4 billion, a steep decline from the R12.2 billion profit in 2023.
To combat these financial setbacks, MTN Nigeria is implementing various measures aimed at restoring profitability and rectifying the imbalance of liabilities exceeding assets, including the renegotiation of tower leases and the recent approval of a tariff increase. Mupita stated, “That pain which we’ve had for 18 months, is abating somewhat… the business is growing very strongly. So I’m actually very bullish and confident that we’ll see strong recovery in Nigeria.”
MTN Group, which boasts a customer base of 291 million across 16 African markets, has reportedly achieved a cost saving of R3.8 billion, with R1.2 billion sourced from successful lease negotiations, as highlighted by CFO Tsholofelo Molefe.
The situation in Sudan has posed additional operational challenges due to ongoing armed conflict, resulting in an impairment loss of R11.7 billion. Mupita mentioned that MTN is witnessing a gradual return of its services in conflict-impacted regions, like Khartoum, where the network had been inoperative since April 2023. Peter Takaendesa, head of equities at Mergence Investment Managers, emphasized that while underlying service revenue appears strong, the overarching macroeconomic conditions remain a significant challenge.
In summary, Ralph Mupita’s comments point towards a hopeful recovery for MTN in Nigeria despite considerable financial losses resulting from currency devaluation and macroeconomic challenges. The company is implementing targeted strategies to enhance profitability and is witnessing gradual operational stabilization in conflict-affected regions such as Sudan. Attention will need to remain focused on overcoming external factors that affect their performance.
Original Source: techcentral.co.za
