MTN Nigeria plans to hold an extraordinary general meeting (EGM) with its shareholders on how to manage the capital loss it suffered in 2023.
The EGM, which will take place in Lagos, is scheduled for late April. Its sole purpose is to address the loss of capital by the company for the year ended December 2023.
We reported in March that MTN CEO Ralph Mupita had highlighted currency volatility in Nigeria as one of the company’s key challenges as it pushes on with its strategy to cut down costs and accelerate its digital platforms strategy.
MTN Nigeria recorded a depletion in its retained earnings and shareholder’s fund for the year under review due to a net loss after tax of N137 billion (about US$102.8 million at current rates), driven by a N740 billion (US$555.1 million) foreign exchange loss. Service revenue grew by 22 per cent to N2.5 trillion (about US$ 1.9 billion) but recorded a N137 billion loss (about US$103.3 million) after tax.
Rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in Q1 arising from a redesign of the naira “created severe headwinds for our customers and our business during the year”, according to Karl Toriola, CEO of MTN Nigeria, quoted in Nigerian news resource Punch.
But devaluation has been perhaps the biggest issue. Toriola points out that “the significant devaluation of the naira in 2023 in particular resulted in a materially higher net forex loss… [and] negative retained earnings and shareholders’ equity at the end of December 2023”.
The company’s board of directors has resolved not to declare a final dividend for 2023.
As for outlook, Kariola expects a “challenging 2024 as we tackle the complexity and ongoing effects of high inflation and elevated forex volatility on our operations”.
To make matters more complex, another devaluation took place recently. Reuters says that this, Nigeria's second currency devaluation in less than a year, and new forex rules, suggest the central bank is gearing up to let the naira float freely.
However, it also quotes investors and analysts who say a huge backlog of orders for dollars and low liquidity may stall reform momentum.
