MTN Nigeria (MTNN), the local subsidiary of Africa's largest mobile network operator MTN Plc, reported a six-fold increase in after-tax loss to N519 billion in the first half of the year.
According to its earnings report released Wednesday, this represents its biggest half-year loss on record.
The loss for the six-month period is already about three times the loss recorded for the entire past year, compounding an experience that dates back to the period when the devaluation of the naira in Nigeria led to a massive loss of foreign exchange for the wireless operator.
Nigeria is MTN Plc's largest market, accounting for about a third of its revenue, meaning the disappointing performance could have negative implications for the group's results when they are released.
The country devalued its currency by 31 percent in January, the second time in eight months, as part of reforms aimed at unifying its official and unofficial exchange rates.
This led to MTNN’s net foreign exchange loss rising to N887.7 billion from N454.7 billion a year earlier after exchange rate pressures caused foreign currency obligations such as loans, trade and other payables and lease liabilities to increase in naira terms.
Revenue rose 32.8 percent to N1.5 trillion, driven by a sharp rise in data revenue, which alone contributed 47.2 percent of turnover.
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However, runaway costs eroded much of that as Nigeria's inflation rate approached its highest level in nearly three decades in the reporting period, leaving operating profit 27.7 percent weaker.
For example, direct network operating costs more than doubled to N586.7 billion, while other operating expenses grew by 103.3 percent.
“Despite excluding 8.6 million subscribers during the first half, in accordance with NCC’s guidance, we managed to limit the decline in our base to 280,000, resulting in a 2.9% year-over-year increase in our customers to 79.4 million,” said CEO Karl Toriola.
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“Higher headline inflation impacted our cost profile and eroded earnings,” he added.
Pre-tax losses amounted to N751.3 billion, compared with N119.4 billion a year earlier. MTN Nigeria received a tax credit of N232.2 billion from the tax authorities, allowing it to reduce net losses to N519.1 billion.
MTNN’s shareholders’ fund remained in the red during the period as at the end of last year, standing at -N577.7 billion.
Assets at the end of the period totaled N3.3 trillion, while liabilities stood at N3.9 trillion.