MTN warns of massive losses – MyBroadband

MTN Group has warned that it expects to report a 140% to 150% decrease in headline earnings per share for its half-year results.

The company’s headline earnings will swing from R5.42 per share for the January–June period last year, to a headline loss of between R2.17 and R2.71.

MTN said its financial results were negatively affected by macroeconomic factors, including the further devaluation of the Nigerian naira, and operational challenges in Sudan due to the ongoing conflict.

“The naira devaluation drove higher operating and net finance costs for MTN Nigeria, which are expected to impact the Group H1 24 financial performance,” it said.

According to MTN, the naira devaluation impacts on its Nigerian operating expenses is estimated to reduce the group’s half-year results by 90 cents, compared to a 4 cents impact last year.

“The foreign exchange losses in MTN Nigeria’s financial results are estimated to reduce Group H1 ’24 results by a further 389 cents (2023: 123 cents).”

Another issue was foreign currency translations affecting reporting currency results, MTN said.

This includes impacts from certain subsidiaries, which are estimated to reduce its half-year results by approximately 310 cents.

These break down as follows: MTN Nigeria — 283 cents, MTN Ghana — 15 cents, and MTN South Sudan — 12 cents.

Despite these challenges, MTN said it expects to report a resilient underlying performance with pleasing momentum in some key markets.

“MTN Ghana and MTN Uganda reported strong H1 ’24 performance, while we expect reporting results for MTN SA that demonstrate encouraging progress in key areas of the business,” it said.

“The fintech platform also sustained robust trends in its revenue growth and ecosystem expansion.”

MTN also said it had been encouraged by the progress in cash upstreaming from markets like Nigeria, which supported the holding company leverage on 30 June 2024 remaining largely stable relative to 31 March 2024.

The company said its headline earnings per share were negatively impacted by some non-operational items of approximately -R6.29 relative to -R2.07 last year.

These include:

• Hyperinflation adjustments of -57 cents (2023: -38 cents)
• Foreign exchange losses of -519 cents (2023: -169 cents), which includes the aforementioned naira depreciation impact of -389 cents (2023: -123 cents)
• Deferred tax charge/asset reversal of -28 cents (2023: nil)
• Other non-operational items of -25 cents (2023: nil)

When adjusting for these, MTN still expects a substantial 45% to 52% drop in headline earnings, from R7.49 last year to a range of R3.58–R4.12 this year.

In addition to the trading statement, MTN reported that its Nigerian business has successfully renegotiated its tower lease agreements with IHS Nigeria.

“The revised terms meaningfully reduce the US dollar-indexed component of the leases linked to a discounted US consumer price index, making the leases majority naira-linked.

They also set a cap for the naira consumer price index escalator component and remove technology-based pricing, allowing payments for new upgrades based on tower space and power.

“The renegotiated agreements incorporate an energy cost component indexed to the cost of providing diesel power,” said MTN

“However, the terms also provide for some discounts and incentives over the life of the contracts. The renegotiated terms aim to mitigate macro risks affecting MTN Nigeria as well as support margin recovery and resolution of its negative equity position.”

The company also reported that it has concluded the sale of MTN Guinea-Bissau following the receipt of all regulatory approvals.

“The disposal to Telecel Group Mobile Limited is in line with the Group’s strategic priority to accelerate portfolio transformation,” MTN said.

“MTN has taken steps to ensure a seamless transfer of ownership, which the Group believes is in the best interests of MTN Guinea-Bissau, its stakeholders and the sector in Guinea-Bissau at large.”