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MTN Nigeria has reported a $266 million post-tax loss in 2024, marking a significant financial setback for the telecom giant.
For a company that was once a favourite among investors, this downturn raises pressing questions about when profitability will return and whether shareholders can expect dividends anytime soon.
MTN’s 2024 financial results reflect a perfect storm of macroeconomic headwinds, rising finance costs, and foreign exchange losses.
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However, the company has outlined a recovery strategy focusing on tariff adjustments, cost efficiency, and financial restructuring. But will it be enough?
Key Challenges in 2024:
- Soaring Costs: Despite strong revenue growth, operating expenses surged, weighing heavily on profitability. EBITDA margin dropped by 9.6% to 39.1%.
- Foreign Exchange Losses: The naira devaluation wiped out $616 million from MTN’s books, turning what could have been a profitable year into a record loss.
- Rising Finance Costs: Even as gross debt declined to $648 million (from $785 million), finance costs jumped due to increased lease interest expenses from MTN’s revised tower lease agreements.
“Our financial performance was significantly impacted by the challenging operating environment, particularly currency devaluation and rising interest rates.”
Even with strong revenue growth of 36% to $2.2 billion, surging costs wiped out profitability, turning shareholders’ funds to a negative of $304 million.
MTN believes that a combination of a 50% tariff hike, cost reductions, and financial restructuring will create a foundation for recovery. The company’s official outlook reflects this confidence:
“The recent approvals of new tariffs by the regulator will enable us to sustain the required investments in our networks, which are needed to enhance customer experience and industry sustainability.”
MTN has implemented several measures to navigate its financial challenges beyond the tariff hike:
- Renegotiating Tower Lease Agreements: Adjusting contracts with IHS led to $76 million in operational cost savings, improving EBITDA margins.
- Reducing FX Exposure: The company aggressively cut its outstanding US-dollar liabilities from $277 million to $14 million, minimising currency volatility risks.
- Expense Efficiency Initiatives: Implementing cost-cutting measures saved $28 million in 2024.
- Optimising Capital Expenditure: MTN deployed $295 million in capex, lowering its intensity to 13.2% from 18.2% in 2023, ensuring more efficient capital allocation.
MTN’s Projections for 2025:
- Service revenue growth of at least 45%.
- EBITDA margin recovery to at least mid-40%.
- A full reversal from negative shareholders’ equity.
Long-Term Goals:
- Service revenue growth of at least 20%.
- EBITDA margin of at least 50%.
- Normalisation of capex intensity.
Using 2024 as a baseline, a 50% tariff hike could push MTN’s key financials to a more positive trajectory:
- Revenue: If service revenue grows by 45%, MTN’s top line could rise to $3.2 billion in 2025.
- EBITDA: With an expected mid-40% margin, EBITDA could rebound to $1.48 billion, a significant improvement from $875 million in 2024.
- Net Profit: Assuming cost pressures ease and FX losses stabilise, MTN could swing back to profitability, with a projected PAT of $338–$406 million, a sharp turnaround from 2024’s deep losses.
MTN’s turnaround plan is ambitious, but execution remains key. The 50% tariff hike, cost reductions, and financial restructuring offer a pathway back to profitability. However, macroeconomic volatility, exchange rate risks, and consumer price sensitivity remain critical uncertainties.
The biggest tailwind here is the 50% tariff hike, but the critical unknown remains price elasticity. Will Nigerians continue purchasing data and airtime at higher prices, or will they cut back?
- Rising unemployment and stagnant wages could limit discretionary spending.
- Intensifying competition from Airtel, Glo, and 9Mobile may pressure market share and pricing power.
If demand declines sharply, MTN’s revenue projections could fall short, worsening its financial position and delaying recovery.
MTN’s share price has shown resilience, recovering from a 24% year-to-date loss in 2024 to a 32% gain by February 2025, ranking it 23rd on the NGX. This signals renewed investor confidence, but for how long?
Overall, MTN remains a high-risk, high-reward stock. Investors must weigh short-term market volatility against long-term growth potential. The next few quarters will be crucial in determining whether MTN’s strategy is strong enough to restore profitability and deliver value to shareholders.
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