MTN Nigeria and Airtel Africa are projected to return to profitability by 2025, despite significant foreign exchange losses impacting their financial positions. MTN recorded over N925 billion in losses in 2024, while Airtel decreased its losses to $153 million. Analysts attribute the challenging performance to currency devaluations, while strategic adjustments may drive recovery in the telecommunications sector.
MTN Nigeria and Airtel Africa, two prominent telecom companies listed on the Nigerian Exchange (NGX), are projected to return to profitability by 2025 in light of a challenging financial landscape caused by foreign exchange (FX) losses linked to the devaluation of the Nigerian naira. Specifically, MTN Nigeria reported over N925 billion in FX losses during the financial year 2024, compromising the quality of its balance sheet.
Airtel Africa, in comparison, experienced a significant decline in FX losses, with $153 million recorded at the conclusion of its 9-month financial year 2025, down from $903 million the previous year. According to CSL Stockbrokers Limited, the outlook for profitability appears optimistic as the telecom sector navigates through these financial challenges.
Throughout 2024, mixed performances were observed across Nigeria’s telecommunications sector. MTN Nigeria managed to sustain revenue growth, achieving a notable 36% year-on-year increase to N3.36 trillion, up from N2.47 trillion in 2023. Conversely, Airtel Africa recorded a revenue decline of 5.8%, with its revenue falling to $3.66 billion, a decrease from $3.88 billion in the same period the previous year. Analysts attributed this decline to significant currency pressures across key markets.
MTN Nigeria’s top-line growth was primarily supported by increases in data and voice revenues of 49.1% and 14.5% year-on-year, while Airtel’s performance was hindered by declines of 2.8% in data revenue and 14.7% in voice revenue. The telecom operators are contending with rising operational costs fueled by inflation, energy prices, and currency devaluation, which are intensifying the pressure on profitability.
For MTN Nigeria, Direct Network Operating Costs surged drastically by 88.1% year-on-year to N1.23 trillion, rising from N655.2 billion in 2023. In contrast, Airtel demonstrated more efficient cost management, reporting a marginal decline of 1.1% in Direct Network Operating Costs, down to $708 million from $716 million in the previous year. Analysts consistently express concern over how currency devaluation mars the financial stability of Nigeria’s telecom sector.
MTN Nigeria is particularly impacted, with FX losses reaching N925.36 billion in 2024. To alleviate this situation, the company renegotiated tower lease agreements with IHS and ATC to secure more favorable, Naira-based terms, minimizing the exposure to the US dollar. These negotiations included a cap linked to the US Consumer Price Index, enhancing financial stability and performance metrics.
This strategic shift allowed MTN to report a quarterly profit of N114.49 billion for Q4 2024, a stark recovery from the N454.60 billion loss of the prior year. Airtel has similarly localized its foreign debt, sharply reducing its FX losses to $153 million and achieving a net profit of $248 million, improving significantly from the $2 million profit recorded in the same period the previous year.
CSL Stockbrokers remains optimistic regarding the telecom sector’s future, highlighting factors such as the recovery in mobile subscriptions, recent tariff increases, an expansion of 4G and 5G networks, rising broadband adoption, and the transition from analog to digital services. This positive outlook suggests both MTN and Airtel are positioned for a return to profitability in the near future.
In summary, MTN Nigeria and Airtel Africa are expected to regain profitability by 2025, following significant strategic adjustments to mitigate foreign exchange losses. MTN’s impressive revenue growth and Airtel’s effective cost management illustrate their resilience amidst challenging economic conditions. The telecommunications sector in Nigeria is predicted to improve, driven by recovering mobile subscriptions and network expansions, indicating a positive trajectory for these leading operators in the coming years.
Original Source: dmarketforces.com
