MTN’s Profit Falls Sharply Due to Naira Devaluation
MTN Nigeria, one of the country’s largest telecommunications operators, has reported a steep decline in profit following the sharp devaluation of the naira. The telecom giant revealed that currency fluctuations have taken a heavy toll on its financial results, eroding earnings and increasing operational costs. The development underscores the broader challenges facing Nigerian businesses in an economy grappling with exchange rate volatility.
The company’s financial report shows that profit before tax fell significantly compared to the previous year. MTN attributed the decline to substantial foreign exchange losses, as the devaluation of the naira increased the cost of dollar-denominated expenses such as equipment imports, lease payments, and network maintenance. These costs, which form a large portion of MTN’s capital expenditure, have skyrocketed due to the weakening local currency.
Analysts note that MTN’s situation mirrors the struggles of many multinational companies operating in Nigeria. The Central Bank’s policy reforms, including the unification of exchange rates, were intended to stabilize the forex market but have temporarily increased pressure on corporates with high exposure to foreign debt and obligations. As a result, profitability has been squeezed despite steady growth in revenue.
Despite the challenges, MTN maintained that its core business performance remains strong. Subscriber growth, data usage, and mobile money adoption continue to rise, reflecting Nigeria’s ongoing digital transformation. However, the company acknowledged that inflation, rising energy costs, and forex-related expenses have offset these operational gains.
To cushion the impact of the currency crisis, MTN is exploring strategies such as cost optimization, local sourcing of materials, and pricing adjustments. The company also plans to deepen its investment in fintech and digital services to diversify income streams beyond traditional voice and data. These moves are part of its long-term plan to sustain profitability in a volatile economy.
The management of MTN emphasized that the financial setback is temporary and that it remains committed to Nigeria’s telecom market. The company reassured shareholders that it will continue to invest in network expansion, quality of service, and digital inclusion to support economic growth and national development.
Financial experts believe that a more stable exchange rate and improved macroeconomic environment will help MTN and other telecom players recover. They also stress the need for government policies that encourage local manufacturing of telecom equipment and reduce dependence on imports.
The Nigerian Communications Commission (NCC) has expressed support for the telecom sector during this economic downturn. The Commission continues to engage operators on strategies to maintain service quality while ensuring that pricing remains fair for consumers.
MTN’s sharp profit decline highlights the vulnerability of Nigeria’s telecom sector to economic fluctuations. Yet, the company’s resilience and commitment to innovation signal hope for recovery once the macroeconomic headwinds ease. The telecom industry remains a vital driver of Nigeria’s digital economy, even amid the challenges of currency devaluation.