MTN to cut costs and hike prices at Nigeria unit after naira hit (updated)

IHS Holding

25/03/2024 05:36

(Recasts with Nigeria mitigation plans, adds CEO comments)
    By Nqobile Dludla
       JOHANNESBURG, March 25 (Reuters) - MTN Group's  MTNJ.J 
Nigeria unit is working on restoring its profitability and
strengthening its balance sheet through managing costs and
tariffs after Africa's biggest telecoms operator reported a
slump in annual profit on Monday.
    The drop in group profit was due to a sharp devaluation in
the Nigerian naira, which pushed MTN Nigeria  MTNN.LG , the
group's biggest business, to a loss after tax of 137 billion
naira ($101.48 million) and negative equity. 
    South Africa-headquartered MTN said its headline earnings
per share (HEPS) - one of the main profit measures - tumbled by
72.3% to 315 cents for the year ended on Dec. 31, from a
restated 1,137 cents a year earlier. 
    Adjusted HEPS declined by 9.5% to 1,203 cents.
    Nigeria's central bank in June adopted new forex rules that
MTN said had since led to an approximately 96.7% devaluation in
the naira as of December.
    "I think on Nigeria, we're anticipating that we'll continue
to have some macro headwinds," Group Chief Executive Ralph
Mupita said in a press call. "We're anticipating that the naira
will remain volatile for some time."
    MTN is working with regulators across several of its
markets, including in Nigeria, to get approval to increase
tariffs for voice and data.
    "Given our expense profile in Nigeria, we need some tariff
increases to mitigate the cost of running the networks," Mupita
said.
    The majority of network expenses are driven by contracts MTN
Nigeria has with cell tower operator IHS Holding Ltd  IHS.N  and
others, such as ATC.
    The operator is engaging with these tower companies to
renegotiate some of its tower contracts to mitigate the jump in
costs due to the naira's devaluation.
    A third area of focus is dollar exposure on its balance
sheet, Mupita said. 
    The group as a whole has a three year 7 billion rand 
($368.51 million) to 8 billion rand expense efficiency target.
Nigeria will be a big part of this exercise, Mupita added. 
    At a group level, service revenue grew by 6.9% to 210.1
billion rand.  

($1 = 1,350.0000 naira)
($1 = 18.9956 rand)

 (Reporting by Nqobile Dludla; Edting by Tom Hogue, Muralikumar
Anantharaman and Louise Heavens)
 ((nqobile.dludla@thomsonreuters.com; +27103461066;))