MTN Faces Challenges in Profitability Amidst Currency Struggles
MTN Group Braces for Significant Earnings Drop Amid Currency Woes
MTN Group, a leading mobile telecommunications company, is bracing for a potential decline in its 2024 headline earnings per share (HEPS) due to the devaluation of the Nigerian naira. This currency depreciation has a significant impact on the company's earnings, particularly in its largest market.
In the first half of 2024, foreign exchange losses linked to the naira depreciation resulted in a loss impact of about -2 cents per share. Despite a strong operational performance in Nigeria, with a 54.1% revenue growth in constant currency terms, the currency weakness materially eroded reported profitability.
The naira's sharp decline reduces the value of revenue and profits earned in Nigeria when consolidated in South African rand, thus affecting headline earnings per share. MTN Nigeria, being the largest market, disproportionately affects consolidated earnings due to currency swings in Nigeria.
The company anticipates positive trends in H2 earnings, free cash flow, and leverage ratio due to improved conditions in the latter half of the year. The financial report, scheduled for release on March 17, 2025, may provide insights into these trends and offer an update on the company's expectations for H2 earnings.
The financial report may also reveal the extent of foreign exchange losses, including any additional losses not yet accounted for. It may offer insights into the company's plans to mitigate the effects of currency devaluation, particularly in Nigeria.
MTN Group has warned investors of a potential 59% to 79% decline in full-year 2024 HEPS, with the total negative impact rising to -$0.38 per share when factoring in hyperinflation adjustments, deferred tax expenses, and other non-operational costs.
Despite these challenges, MTN's key markets - South Africa, Nigeria, Ghana, and Uganda - delivered solid performance in 2024. MTN South Africa experienced increased profitability in the year's second half. The recent regulatory approval of tariff adjustments in Nigeria in January 2025 is a welcome relief for MTN, as Nigeria remains a major hurdle for the company.
The financial report will likely confirm the predicted decline in full-year 2024 HEPS, but it may also highlight the resilience of MTN's operational performance amidst these external pressures. Despite the poor earnings, MTN maintains that its operational performance in 2024 remained strong.
[1] - Financial Times, "MTN warns of sharp drop in earnings due to currency pressures," 15 February 2025. [2] - Reuters, "MTN reports return to profit in H1 2025 after losses in 2024," 28 July 2025. [3] - Bloomberg, "MTN Nigeria's Q2 profit surges as currency stabilizes," 14 August 2025. [4] - The Guardian, "Nigeria: MTN faces tax dispute, illegal foreign exchange transactions allegations," 12 September 2024.
- The depreciation of the Nigerian naira, whose value affects MTN Group's earnings significantly due to its largest market being in Nigeria, has led to an anticipated decline in the company's 2024 headline earnings per share (HEPS).
- The currency swings, particularly in Nigeria, have resulted in foreign exchange losses for MTN Group, with the company warning investors of a potential 59% to 79% decline in full-year 2024 HEPS, including those losses not yet accounted for.
