In view of incurred losses due to weakened local currency (Kwacha), Malawi’s largest telecom operator Telekom Networks Malawi (TNM) has projected a 90% decline in profit after tax for the year ended 31 December, 2022.

In a trading update issued by the Malawi Stock Exchange, the company said foreign exchange losses will have a negative impact on its profit after tax.

Company secretary Christina Mwansa cautioned: “In line with the listing requirements for the Malawi Stock Exchange, a listing company is required to publish a trading statement as soon as there is a reasonable degree of certainty that the financial statement for the period to be reported upon next will differ by at least 20% from that of the previous corresponding period. TNM’s financial statements for the period will be published in the press by April 2023 following approval by the board of directors.”

In 2021, the company posted a 25% increase in profit after tax of MK9.69-billion, up from MK7.73-billion posted the previous year fuelled by increased data revenue and earnings before interest, tax and depreciations, among others.

In the first half of last year, TNM reported a MK1.34-billion loss, a development the company attributed to the impact of the 25% devaluation of the local currency effected by the Reserve Bank of Malawi (RBM) in May the same year (2022).

In August last year, TNM was forced to increase its tariffs by 20% resulting in customers paying more for data and voice services due to what the company said was unstable business environment occasioned by the devaluation of the local currency coupled by the inflationary pressure.

TNM and Airtel Malawi will face competition from a third operator, Malcel, scheduled to launch its business in October this year.

Last year, both TNM and Airtel said they expected profit after tax to be lower year-on-year due to foreign exchange loss resulting from the devaluation of the local currency.

The local currency was devalued as part of the government’s attempt to ensure that a new International Monetary Fund (IMF) Extended Credit Facility (ECF) is in place to help the country navigate through tough economic conditions.

The RBM said the move was to realign the value of the local currency to market trends and ascertain its true value.