Ralph Mupita, CEO of MTN Group, reports optimism for recovery in Nigeria following substantial losses due to naira devaluation and inflation. Despite a 200% increase in pre-tax loss in Nigeria, strategies are underway to stabilize the business. Overall performances have decreased, but there is potential for growth as cost-saving measures help mitigate losses.
Ralph Mupita, the Chief Executive Officer of MTN Group, has expressed optimism regarding the recovery of the company’s Nigerian operations following a significant pre-tax loss attributed to a devaluation of the naira. Nigeria has faced ongoing dollar shortages, prompting the government to devalue the currency to stabilize the economy and attract foreign investments. This situation, compounded by high inflation and interest rates, has resulted in a more than 200% increase in MTN Nigeria’s pre-tax loss, reaching ₦550.3-billion (R6.4-billion).
In the overall performance for the group, MTN reported a pre-tax loss of R4.4-billion for the year ending December 31, marking a stark contrast to a profit of R12.2-billion in 2023. To combat this financial strain, MTN Nigeria is implementing various strategies, including the renegotiation of tower leases and a tariff hike which received approval in January. Ralph Mupita remarked, “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.”
Additionally, MTN, which boasts 291 million customers across 16 African countries, successfully cut costs by R3.8-billion, with R1.2-billion saved from renegotiated tower leases. However, MTN’s performance in Sudan has been negatively impacted by ongoing armed conflict, leading to impairments totaling R11.7-billion. Mupita noted that operations have begun to resume in conflict-affected areas, including Khartoum, where network services have been disrupted since April 2023. Peter Takaendesa, head of equities at Mergence Investment Managers, commented on the underlying service revenue, indicating strong performance in constant currency, while also acknowledging the challenges posed by macroeconomic conditions. Group service revenue decreased by 15% to R177.8-billion, but showed a 14% increase in constant currency terms.
In conclusion, while MTN Group has faced significant challenges, particularly in Nigeria where currency devaluation and economic instability have led to major financial losses, the leadership remains optimistic. Various recovery initiatives are in place, indicating a positive outlook for future growth in Nigeria. Despite difficulties in other regions, notably Sudan, the company’s strategic cost-saving measures and improving service performance offer hope for a turnaround.
Original Source: techcentral.co.za
