MTN: The Nigerian Nightmare

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It’s no surprise that MTN is bleeding money in Nigeria, a country that’s notorious for its toxic business environment. The company’s latest financial report reveals a whopping loss of ₦519.1-billion (R5.7-billion) in the first half of its 2024 financial year. Yeah, you read that right – that’s a loss, not a profit!

Despite CEO Karl Toriola’s attempts to spin the story, the numbers are a clear indication of the chaos that’s unfolding in Nigeria. The country’s economy is a ticking time bomb, and MTN is right in the crosshairs. With inflation raging at 34.2%, the naira plunging against the dollar, and painful economic reforms driving up costs, it’s no wonder MTN is struggling to stay afloat.

But here’s the kicker – despite the challenges, MTN still managed to deliver service revenue growth of 32.6% in the first half. That’s some impressive stuff, especially considering the headwinds it’s facing. Data and fintech services are driving growth, and the company’s digital business is booming.

However, all this growth comes at a cost. Operating expenditure has more than doubled due to depreciation, higher energy costs, and VAT on tower leases. And don’t even get me started on the forex losses – a whopping ₦887.7-billion, up 95% from the same period last year.

MTN’s share price is taking a hit, down 0.2% on the day and 27% over the past three years. Principal rival Vodacom Group is faring no better, down 23% over the same period. It’s clear that the pressures facing telecoms operators in South Africa and across the continent are mounting.

So what’s the solution? For starters, MTN needs to focus on accelerating earnings recovery, strengthening its balance sheet, and restoring its net asset position. And regulators, listen up – it’s time to approve those consumer price increases and support the long-term sustainability of the industry.

[Image description: A stock image of a broken egg with a caption that reads "Nigeria’s economy is breaking MTN"]

In conclusion, MTN’s latest financial report is a stark reminder of the challenges facing telecoms operators in Nigeria. It’s a tough nut to crack, but the company must continue to adapt and innovate to survive.