Amidst foreign exchange challenges, MTN Nigeria, the country’s leading telecom service provider, is proactively localizing its spending to mitigate anticipated losses in the second half of 2023. Approximately 40% of the company’s operational costs are in US dollars, prompting efforts to reduce dollar liabilities. Despite facing headwinds from the naira’s depreciation and high inflation, MTN Nigeria reported a 21.96% increase in revenue in H1 2023. CEO Karl Toriola emphasizes the importance of adapting strategies and continuous optimization to navigate the challenging operating environment.
Key Points:
- Forex Challenges and Mitigation Efforts:
- MTN Nigeria is taking measures to reduce its exposure to foreign exchange fluctuations, especially as approximately 40% of its operating costs are in US dollars.
- CEO Karl Toriola highlights the impact of dollar liabilities on H1 results and anticipates a more significant impact in H2 due to recent devaluation.
- Financial Performance:
- H1 2023 profits for MTN Nigeria were N128bn ($169m), reflecting a 29.14% decrease from N181bn ($239m) in 2022.
- Despite profit challenges, the company recorded a 21.96% increase in revenue, from N950bn ($1.26bn) in 2022 to N1.15tn ($1.52bn) in H1 2023.
- Adaptation Strategies:
- MTN Nigeria is leveraging various strategies, including localizing expenditure, reducing dollar liabilities, and optimizing core structures to counter the challenging operating environment.
- The company is also capitalizing on economies of scale within MTN Group and utilizing technological advancements to deliver services more efficiently.
- Mobile Money Services Growth:
- Toriola notes that MTN Nigeria is in the early stages of its mobile money services rollout, with tangible results expected in two to three years.
- Despite a decline in fintech subscribers, the company reported a 7.8% increase in fintech revenue in H1 2023.
- Long-term Commitment to Africa:
- Toriola underscores MTN’s commitment to creating shared value in Nigeria and emphasizes the company’s deep-rooted ties to the African continent, affirming that “We are in Nigeria forever.”
Conclusion: MTN Nigeria’s proactive approach to offset forex losses and adapt to the dynamic operating environment reflects its commitment to long-term success in Nigeria. Through localization of spending, reduction of dollar liabilities, and ongoing optimization efforts, the company aims to navigate challenges and bolster growth. The continued rollout of mobile money services and commitment to creating shared value further underscore MTN’s dedication to its stakeholders and the African continent as a whole.
