Forex Volatility Hits Telcos As MTN And Airtel Suffer Huge Losses

MTN Nigeria and Airtel Africa have reported significant losses due to foreign exchange (forex) volatility in the country.

MTN posted a loss after tax of N392.7 billion, while Airtel Africa recorded a loss after tax of $89 million.

The losses were primarily attributed to significant forex headwinds, resulting in a $549 million exceptional loss net of tax following the Nigerian naira devaluation in June 2023 and the first quarter of 2024, and the Malawian kwacha devaluation in November 2023.

MTN’s profit after tax (PAT) adjusted for the net forex loss declined by 57.8% to N47.1 billion.

The net loss for the quarter resulted in a further increase in MTN’s accumulated losses and negative shareholders’ funds to N599.2 billion and N434.7 billion, respectively.

Airtel Africa’s capital expenditure (capex) was broadly flat at $737 million and was below guidance, largely due to a deferral in data center investments.

However, Airtel invested $152 million in license renewal and spectrum acquisitions, including $127 million for the Nigerian 3G license renewal.

The Nigerian naira devalued significantly from 461 per US dollar in March 2023 to 1,303 per US dollar in March 2024, impacting MTN’s reported revenue and EBITDA for the year ending March 31, 2024.

The impact of the naira devaluation on reported revenue and EBITDA was $1,042 million and $554 million, respectively.

Karl Toriola, CEO of MTN Nigeria, attributed the company’s poor performance to severe macro-economic headwinds, including rising inflation and continued naira depreciation. Olusegun Ogunsanya, outgoing CEO of Airtel Africa, acknowledged the challenges posed by forex volatility but expressed optimism about the company’s growth prospects.

Despite the challenges, MTN remained committed to sustained solid commercial momentum, while Airtel continued to focus on delivering against its growth opportunity.

The forex volatility has had a significant impact on the telecoms industry in Nigeria, with both MTN and Airtel reporting significant losses.

The industry is expected to continue facing challenges in the short term, but operators are exploring various strategies to mitigate the impact of forex volatility and improve their performance.

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