MTN Nigeria’s stock price fell by 9.1% due to a significant net loss of 399.45 billion naira for 2024, driven by forex losses from naira devaluation. Despite worsening operational costs, the company anticipates recovery through increased tariffs and improved currency stability, projecting a return to profitability by 2025.
MTN Nigeria Communications Plc recently experienced a significant decline in its stock price, dropping by 9.1% to a low of 240 naira, marking its steepest decline in ten months. This downturn is attributed to investor responses to the company’s substantial net loss of 399.45 billion naira ($266 million) for the year ending December, a stark increase from a loss of 133.8 billion naira in 2023. The loss has been primarily linked to forex losses due to the naira’s devaluation.
The naira suffered a depreciation of around 40% in 2024 as the government undertook currency reforms to adjust its peg against the dollar. Despite recent stability since early December, MTN Nigeria faced escalating operational costs which surged by 76.6%, leading to a reduction in its earnings before interest, taxes, depreciation, and amortization (EBITDA) margin by 9.6 percentage points.
However, the recent approval from government authorities to increase tariffs is expected to positively influence MTN’s service revenue and EBITDA margin, potentially restoring profitability by mid-2025. Equity analyst Matilda Adefalujo emphasized the impact of tariff adjustments and relative stability of the naira as crucial factors for MTN’s financial recovery.
Investors and analysts are now closely observing MTN Nigeria’s performance, particularly how the anticipated tariff increase and currency stability will affect its market position and future earnings growth.
In summary, MTN Nigeria’s recent stock decline reflects investor concerns over significant operational losses and naira devaluation impacts. The company’s shifting fortunes hinge on upcoming tariff hikes and economic stability, which could facilitate a return to profitability in the near future.
Original Source: businessday.ng
