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The situation has made the company to lobby for regulatory permission to hike its tariff for voice and data in a country where telecom tariffs are regulated. This is contained in the company’s first quarter 2024 financial statement analyses shows.
In the first quarter of this year, MTN saw a boom in revenue by 32.5 per cent from N568.1bn in the first quarter of last year to N752.98bn this year. The performance was driven by N349bn revenue from data services and N318.9bn revenue from voice services.
Despite the surge in revenue, the company saw a decline in key performance indices which led to a negative shareholders’ equity and retained earnings of N599.2bn and N434.7bn respectively.
In the first quarter, the naira depreciated from N907 per dollar to N1627 per dollar at the Nigerian Autonomous Foreign Exchange Market which led to losses for Nigerian businesses and impacted on inflation which rose to 33.2 per cent in March.
The Central Bank of Nigeria also hiked the Monetary Policy Rate to 24.75 per cent which has impacted funding costs for Nigerian businesses.
Approximately 47 per cent of MTN’s debts have fixed interest rates, while 53 per cent are floating and have been impacted by the interest rate hikes.
The company’s net finance costs spiked by approximately 17-fold to N749.8bn against N43.7bn spent in the first quarter of 2023, a setback significantly driven by the naira depreciation.
MTN said, “We are deeply engaged with the authorities, through our industry body, on tariff increase to manage the effects of the challenging operating conditions. Importantly, appropriate tariff increases will be necessary to support continued investment and the long-term sustainability of the industry.
“This will support our commercial interventions in our work to accelerate topline growth.”
Aside from MTN, other operators under the Association of Licensed Telecom Operators of Nigeria (ALTON) and the Association of Telecommunication Companies of Nigeria (ATCON) last week notified that they plan to embark on a tariff increase, which is indicative of the losses recorded by the players in the industry.
“Continued elevated inflation and unpredictable foreign exchange rates remain significant challenges for businesses. However, we remain focused on sustaining our commercial momentum, accelerating our service revenue growth, unlocking operational efficiencies, and strengthening our balance sheet to improve the profitability of our business. We do, however, also require regulated tariff increases to restore the profitability of the Company,” MTN Chief Executive Officer, Karl Toriola said.
MTN hopes that the approval of tariff hike by the regulator, reducing foreign exchange exposure and initiatives to drive revenue growth among others are the means to return the company to profitability.
