• Devaluation hits telcos as MTN, Airtel report losses in 9 months
From Uche Usim, Abuja and Chinwendu Obienyi
For the umpteenth time, the Central Bank of Nigeria (CBN) has refuted viral reports and text messages suggesting that a naira redenomination programme was in the offing, urging the public to totally disregard the hoax.
CBN spokesman, Dr Isa Abudulmumin, in a statement on Tuesday, said it was disturbing reading messages that suggested there were plans to redominate the naira with effect from January 2024.
“We are concerned that this narrative, which we had refuted before now, appears to be gaining traction with several debates on the implication of such a policy for the Nigerian economy”, Abdulmumin stated, urging the public to disregard the misleading message.
“The authors of the message, in their mischief, modified text eked from an old policy move by a previous CBN Governor in 2007 to make it appear recent.
“For the avoidance of doubt, there is currently no plan by the bank to restructure and redenominate the naira. Whilst the CBN may be considering reforms, such are subject to laid down procedures in line with the provisions of the CBN Act, 2007.
“The public is hereby advised to ignore the news report, as it is speculative and calculated to cause panic in the polity”, the CBN added.
Meanwhile, there are strong indications to believe that current FX illiquidity appears to be having a searing impact on the nation’s economy with some telecommunication giants, MTN Nigeria and Airtel Africa reporting losses in the first 9 months of 2023.
According to a filing obtained from the Nigerian Exchange Limited (NGX) website on Tuesday, despite a revenue growth of 21.8 per cent from N1.45 billion recorded in 2022 to N1.77 billion in the period under review, MTN Nigeria’s net finance costs (+190.2 per cent year-on-year) rose markedly in the third quarter of 2023 as a significantly higher foreign exchange loss of N101.38 billion was recorded in 2023 as against N14.24 billion recorded in the corresponding period of 2022. The figure was influenced by a 192.8 per cent y/y growth in finance cost.
The higher FX loss balance points to the impact of the currency devaluation on MTNN’s finance charge.
On the other hand, the company’s profit before tax (PBT) and profit after tax (PAT) stood at N232.47 billion and N147.36 billion, respectively. Compared with N400.67 billion and N269.04 billion recorded in 2022, this marked a decline of 42 per cent and 45.2 per cent respectively.
Airtel Africa on the other hand, announced that its revenue in constant currency grew by 19.7 per cent, with reported currency revenues up by 2.3 per cent to $2,623 million. It however noted that in Q2 2024, reported currency revenues declined by 4.7 per cent reflecting a full quarter’s impact of the Nigerian naira devaluation in June 2023.
The company, whilst stating that currency revenue growth was impacted by currency devaluation, noted that all segments delivered double-digit constant currency revenue growth. The Board also declared an interim dividend of 2.38 cents per share, an increase of 9 per cent, in-line with our progressive dividend policy.
It noted further that its currency EBITDA declined by 3.3 per cent in Q2’24 as the full impact of the Naira devaluation in June 2023 was incorporated. According to the company, loss after tax which stood at $13 million was driven largely by a foreign exchange loss of $471 million recorded in finance cost before tax and $317 million after tax because of the devaluation of the Naira in June 2023. This impact, it said, has been classified as an exceptional item.
Reacting to the development, the Chief Executive Officers of the companies under review, attributed the ‘not-so-good’ performance to the soaring inflation, naira devaluation exacerbated by ongoing volatility in the global macroeconomic and geopolitical environment.
The Chief Executive Officer, MTN Nigeria, Karl Toriola, said, ‘The operating conditions in the first nine months of 2023 remained tough. This was in line with expectations following the removal of the fuel subsidy, the currency devaluation due to the liberalisation of foreign exchange (forex) management and the impact of the 2023 Finance Act. In the near term, consumer spending power has been diminished by the upward pressure on overall inflation’.
He noted that as the company navigates the challenging operating conditions, it will continue to invest in its business to strengthen commercial operations and focus on expense efficiencies to support earnings and cash flow generation.
“As part of our proactive initiatives to curb the impacts of the macro volatility on our business, we have re-allocated the leases for towerco services of approximately 2.5k network sites due to expire in 2024 and 2025, for which IHS Nigeria Limited (IHS) currently provides tower services”, Toriola said.
For his part, the Group Chief Executive Officer, Airtel Africa, Olusegun Ogunsanya, said that the company’s results for the first quarter were significantly impacted by the changes to the FX market in Nigeria, introduced by the Central Bank (CBN).
According to him, “Whilst the changes are required for the long-term benefit of the Nigerian economy, the immediate impact of the naira devaluation continues to weigh on our reported financial performance in the period. Our focus remains to enhance long term value by continuing to drive sustained and efficient growth”.