MTN Nigeria has reported a notable decline in its profits for the second quarter of 2023, with pre-tax profits dropping by 64.32% compared to the previous year, amounting to a decrease of N44.612 billion. This decline has impacted the half-year pre-tax profits, which now stand at N200.391 billion, in contrast to N268.635 billion during the same period last year.
Key highlights from the Q2 2023 results compared to Q2 2022 include:
- Revenue experienced a positive growth of 23.27%, reaching N590.605 billion.
- Direct network operating expenses also increased, up by 29.28% to N140.313 billion.
- Operating profit displayed a rise of 24.26%, reaching N214.958 billion.
- Finance Income saw a significant surge of 340.15%, amounting to N11.708 billion.
- On the other hand, Finance Costs increased by 259.78%, totaling N182.054 million.
- The overall Profit for the year was N27.399 billion, which represents a decline of 67.70%.
- Earnings per share also saw a decrease of 67.07%, amounting to N1.38.
- Cash and cash equivalents demonstrated positive growth, up by 42.86% to N499.288 billion.
- The company’s Total Assets also increased by 8.99%, reaching N3.138 trillion.
- Long-term and Short-term borrowing experienced an upward trend of 23.98%, totaling N855.067 billion.
Upon closer examination of these financial results, it becomes clear that the decline in MTN Nigeria’s pre-tax profits can be attributed to the substantial growth in finance costs, primarily driven by a significant increase in foreign exchange losses. Notably, the foreign exchange loss saw an astounding year-over-year growth of 955.12%, reaching N126.815 billion.
This increase in foreign exchange loss directly influenced the overall finance costs incurred by the company, which in turn had a pronounced impact on the decline in pre-tax profit. An important factor contributing to this situation was the devaluation of the Naira, which dropped from N461.10/$1 in December 2022 to N756.08/$1 in June 2023. This devaluation occurred due to the Central Bank of Nigeria’s decision to consolidate all foreign exchange windows into the Investors’ and Exporters’ (I&E) window, allowing for a free float of the national currency against major global currencies.
In conclusion, MTN Nigeria’s second-quarter financial performance in 2023 reflects a substantial decrease in profits, largely influenced by the significant growth in finance costs resulting from soaring foreign exchange losses. The change in currency policy and the devaluation of the Naira has played a pivotal role in shaping these financial outcomes