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MTN Nigeria posted a surprise slide in profit as net foreign exchange losses soared as a result of the recent devaluation of the naira.
The Central Bank of Nigeria (CBN) collapsed all FX windows into investors & exporters (I&E) window on 14 June 2023 to allow for a free float of the national currency against the dollar and other global currencies.
MTN Nigeria finance charge was impacted by the devaluation of the Naira from N461.10/$1 in December 2022 to N756.08/$1 in June 2023 which followed the policy change.
The largest telecommunication firm in Nigeria saw net foreign exchange loss jump by 865% to N131.45 billion in the six months period to June 2023.
This pushed MTN Nigeria profit for the period down 29% to N128.5 billion from N181.9 billion in June 2022. Earning Per Share fell to N6.33 from N8.95.
For investors the stock could be under pressure over the next 6-months as the full impact net foreign exchange loss is expected to kick-in in the second half (H2) of 2023, according to Karl Olutokun Toriola, Chief Executive Officer of MTN Nigeria.
“The exchange rate is adjusted based on the reference rate at the end of the preceding quarter for some of the contracts and the average rate in the quarter for others,” Toriola said.
On a slightly positive note revenues rose by 21.96% to N1.158 trillion, while operating profit increased by 19.66% to N421.5 billion.
MTN Nigeria has announced it will pay an Interim Dividend of N5.60 per ordinary share to be paid to shareholders whose names appear in the Register as at the close of business on 16 August 2023.