Market News

By Abdullateef Aliyu

Telecommunication service providers, MTN Nigeria and Airtel Africa Plc have been projected to return to profitability in 2025.

This is coming after foreign exchange losses incurred by the companies both listed on the Nigerian bourse following the depreciation of the naira.

MTN for instance reported a N400.44bn loss after tax for the year ended December 31, 2024 as the foreign exchange losses impacted negatively on the company’s earnings.

The loss, disclosed in the company’s audited financial statements released on Thursday, represents a 192 per cent increase from the N137.02bn loss recorded in 2023.

Overall, the firm recorded more than N925 billion in FX losses in the financial year 2024.

Airtel Africa Plc recorded $153 million (about N235bn) in FX losses at the end of the 9-month financial year 2024, though with a significant year-on-year reduction from $903 million in FX losses in the previous year.

However, a review by CSL Stockbrokers Limited, predicted that the worst is over for the telecom operators, hoping they would return to profitability in 2025.

“Looking ahead, we believe the worst is over for telecom operators, and we expect them to return to profitability in 2025,” the review said.

CSL Stockbrokers averred that the operators in Nigeria’s telecommunications sector are grappling with rising operational costs, driven by high inflation, increasing energy prices, and currency devaluation, which impacted negatively on profitability.

They noted that MTN’s Direct Network Operating Costs surged by 88.1% y/y to N1.23 trillion in FY 2024, up from N655.2 billion in 2023.

The operators recently implemented a tariff hike amidst hope of shoring up their balance sheets.

In addition, MTN Nigeria renegotiated tower lease agreements with IHS and ATC in a bid to reduce fx exposure.

“The revised leases are now primarily Naira-based, with a minimised US dollar-linked portion. Additionally, they are tied to a discounted US Consumer Price Index (CPI) with a cap on the Naira CPI escalator,” CSL said.

Amidst the headwinds that characterised the 2024 and 2023, which have prevented the companies from paying dividends to shareholders, CSL Stockbrokers believe the worst is over.

“Our positive outlook is driven by several key factors, including a steady recovery in mobile subscriptions, recently implemented tariff increases, expansion of 4G and 5G networks, rising broadband penetration, and the ongoing transition from analog to digital models,” the review added.

We must see impact of tariff review – Shareholder

Speaking with our correspondent, Mr. Boniface Okezie, leader of a shareholders’ group in a chat with Daily Trust said shareholders must begin to see the impact of tariff review by the telecom operators in paying dividends to the shareholders who have been left in the wind for the past two years.

Daily Trust reports that MTN Nigeria, which was listed in 2019 has not paid dividends in two consecutive years over the losses.

“There is no hope in getting dividends from MTN for now,” he said.

However, the MTN Group, the parent company declared a final dividend of 345 cents per share, up from 330 cents.

A report by its group office in South Africa on Monday, also said expectations for further growth in 2025 are expected from Nigeria following the tariff adjustments.

This is as the MTN Group reported a 69% slump in full-year earnings, due to devaluation of the Nigerian naira and operational challenges in Sudan.

It reported headline earnings per share (HEPS) – one of the main profit measures in the country – fell to 98 cents in the year to December 31, down from 315 cents in 2023.

MTN Group’s President & Chief Executive Officer, Ralph Mupita however expressed optimism of a better future despite the challenges of currency depreciation in Nigeria, “Elevated inflation and ongoing conflict in Sudan.”