Troubles Loom for MTN as Currency Woes Negatively Impact Earnings Prospects
MTN Group Faces Significant Earnings Drop Amid Currency Volatility
MTN Group, a leading telecommunications company, is bracing for a significant decline in its headline earnings per share (HEPS) for the full year 2024, primarily due to the impact of currency devaluation, particularly in Nigeria.
The Nigerian naira's depreciation has negatively affected MTN's earnings when translated into their reporting currency, leading to substantial foreign exchange losses. These losses have contributed to HEPS declines in recent periods.
In the first half of 2024, the naira depreciation caused a negative impact on HEPS of approximately -389 cents, contributing heavily to a headline loss per share of -256 cents for that period. Despite the company demonstrating strong service revenue growth and profitability improvement in other regions by mid-2025, the currency volatility and devaluation effects, especially in Nigeria—the group’s largest market—remained a significant drag on headline earnings.
The foreign currency weakness reduces the reported rand value of earnings generated in naira, thus lowering headline earnings per share. MTN Nigeria has begun implementing new tariffs to maintain the telecom sector's sustainability amid economic challenges.
Despite these challenges, MTN's key markets—South Africa, Nigeria, Ghana, and Uganda—delivered solid performance in 2024. The company anticipates positive trends in H2 earnings, free cash flow, and leverage ratio.
However, when factoring in hyperinflation adjustments, deferred tax expenses, and other non-operational costs, the total negative impact rises to -$0.38 per share. The sharp decline of the naira has contributed to persistent foreign exchange losses for MTN, with the naira alone responsible for $0.21.
The financial report, scheduled for release on March 17, 2025, will provide a detailed breakdown for investors. Despite the gloomy forecast, MTN's stock reached a 52-week high yesterday morning before stabilizing.
MTN Group has warned investors of a potential 59% to 79% decline in full-year 2024 HEPS. The company continues to face external economic pressures, but its operational performance in 2024 remained strong, with improved conditions in the latter half of the year.
Despite the negative impact of currency devaluation, particularly in Nigeria, MTN remains optimistic about its future prospects. The company's resilience and adaptability in the face of economic challenges are key strengths that will help it navigate through these difficult times.
The challenging currency devaluation, particularly in Nigeria, has led to substantial foreign exchange losses within the finance sector of MTN Group, negatively affecting their business earnings. Despite the declining HEPS due to the volatile financial environment, MTN's key industries in South Africa, Nigeria, Ghana, and Uganda have shown steady performance in 2024, offering hope for future business growth.
