MTN Group president and CEO Ralph Mupita.

MTN Group, Africa's largest telecom carrier, warned shareholders today that the naira's significant devaluation against the US dollar will have a detrimental impact on its full-year 2023 financial results.

MTN said the rapid devaluation of the naira versus the US dollar in the second half of 2023 had a negative impact on Nigeria's financial performance.

According to MTN Nigeria, this impact is mostly seen in greater operating and net finance expenses, as well as foreign exchange losses.

According to the Group, MTN Nigeria's operations are exposed to foreign currency volatility on both its operating and capital expenditure.

It said: “The most significant of these exposures relates to the tower lease costs, the majority of which have a portion indexed to the US dollar but are invoiced and paid in naira.

“The significant movement in the exchange rate had several non-cash impacts on MTN Nigeria's financial performance.”

MTN Nigeria released its full year performance for the year ended December 2023 yesterday, and stated that its results were severely impacted by the naira’s exchange rate, with a reported loss after tax of $87 million (N137.0 billion), compared to a restated profit after tax of $221 million (N348.7 billion) in 2022.

MTN Nigeria, the most profitable of MTN Group's 19 markets, stated: "This resulted in negative retained earnings and total equity at the end of December 2023 of $132 million (N208.0 billion) and $26 million (N40.8 billion), respectively."

The Nigerian operating company’s performance in the year is expected to have an influence on the Group's financial results, as detailed in the "MTN Group trading statement for the full year ended 31 December 2023", which was issued on the Johannesburg Stock Exchange this morning.

Accordingly, shareholders were advised that MTN expects to report a decrease in earnings per share (EPS) between -70% and -90% (or -750 cents and -964 cents).

Further, MTN Group is expecting a decrease in headline earnings per share (HEPS) of between -60% and -80% (or -692 cents to -923 cents).

MTN Nigeria said that despite the negative currency impact, its performance in a challenging operating environment was pleasing, with user base expansion across its connectivity business and platforms.

MTN Nigeria said it also reported continued strong growth in key commercial metrics – including data traffic (up 44.9% year-on-year, and Mobile Money (MoMo) transaction volume (up 49.2% year-on-year) – both of which drove robust local currency service revenue growth of 22.7% in full year 2023, with an acceleration in the fourth quarter 2023 (up 25.0% year-on-year).