MTN Group reported a half-year loss on Monday as Africa's biggest telecom operator grappled with the devaluation of the Nigerian naira and operational challenges in Sudan.
It said it was working on cutting costs and reiterated it was on track to reach a target to sell off non-core assets by next year.
The company reported a loss before tax of 9 billion rand ($507 million) in the six-month period ended June 30, compared with a restated profit of 8.3 billion rand a year earlier.
"The further devaluation in the naira against the U.S. dollar ... and the ongoing conflict in Sudan had the most significant impact on reported results," CEO Ralph Mupita said.
Nigeria has suffered chronic dollar shortages that have forced authorities to devalue the naira twice in less than a year, as part of the new government's measures to stabilise the currency and attract investment.
MTN Nigeria which was the group's largest business, is now its second biggest by revenue.
The unit has a number of initiatives aimed at restoring profit and addressing its negative equity position, including concluding renegotiations earlier this month on tower lease terms with tower operator IHS.
The improved commercial terms are expected to result in annualised cost savings of between 100 billion to 110 billion naira ($71 million), with annualised EBITDA margin benefit of 4 to 6 percentage points, Mupita told investors.
This is "not a silver bullet in addressing negative equity," Mupita said, but added discussions continued on proposed tariff increases with Nigerian authorities that could help.
MTN Group, which has 288 million customers across 18 markets in Africa, said its group service revenue decreased 20.8% to 85.3 billion rand. In constant currency, group service revenue rose 12.1%.
The company has raised 21.7 billion rand so far as part of its 25 billion rand non-core asset sales programme and should reach its target by next year, Mupita said on a post-earnings media call.
The telecom operator reduced its stakes in MTN Ghana and MTN Uganda during the reporting period for a combined 1.7 billion rand.
There will be further stake sales in Ghana of about 2.1%, and in Cameroon, Ivory Coast and Nigeria, according to Mupita.
Monday, August 19, 2024
MTN posts half-year loss as Nigeria currency devaluation weighs
Nigeria Owes State Oil Firm $4.9 Billion Fuel-Subsidy Debt
Nigeria owes its state-owned oil company almost half of what it plans to collect in revenues this year for a gasoline subsidy it reintroduced in August.
Nigerian National Petroleum Corp. is owed 7.8 trillion naira ($4.9 billion) by the government in subsidy debts for the seven-months to July, according to NNPC’s Chief Financial Officer Umar Ajiya. The government aims to collect 19.4 trillion naira in revenue this year.
The subsidy that was withdrawn in May last year by Nigeria’s President Bola Tinubu to help repair the state’s finances after debt-service costs jumped to 96% of revenues was reinstated to allow measures to be introduced that could cushion Nigerians from spiraling inflation that’s at 33%.
The government will allow NNPC to offset about 2.2 trillion naira it owes the state against the subsidy debt, Ajiya said in an interview after the company announced its results in Abuja, the capital.
The government accumulated the debt to the NNPC because it is the sole importer of gasoline, which it resells to marketers at below market cost to keep prices low. A liter of fuel sells for about 617 naira at the pump at NNPC retail stations in Lagos, the commercial capital, compared with more than a 1,000 naira in neighboring countries, fueling cross-border smuggling of the product.
The state-oil company recorded an annual profit of 3.3 trillion naira in 2023, compared with 2.55 trillion naira a year earlier. It plans to invest $6.6 billion in its operations this year, which will be largely borrowed, Ajiya said.
It foresees crude and condensates production increasing to 2 million barrels a day by year end from an average of 1.75 million barrels per day in August, helped by improved security to combat oil theft, said Oritsemeyiwa Eyesan, executive vice president of the company’s upstream division.
By Ruth Olurounbi, Bloomberg
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Elon Musk Acquires Land In Nigeria To Construct Starlink Ground Stations
BMA understands that Starlink has acquired approximately 29,000 acres of land in Lagos, Ogun, and Rivers states to develop these facilities.
The ground stations will be in strategic areas such as Okun Ajah in Lagos State, Sagamu in Ogun State, and Port Harcourt in Rivers State. Construction is already underway in Okun Ajah, with completion expected by the fourth quarter of 2024. The remaining locations are projected to be operational by 2025.
In collaboration with Equinix, a leader in data centre solutions, Starlink is building these ground stations to strengthen its presence in Nigeria. Equinix entered the Nigerian market in 2022 after acquiring MainOne, a prominent data centre and connectivity provider, in a $320 million deal.
These ground stations, also known as Gateways, are crucial for Starlink’s satellite-based internet service. They communicate with Starlink satellites orbiting the Earth, facilitating data transmission between the satellites and the internet backbone on the ground.
By establishing local ground stations, Starlink aims to bypass international data centres, potentially reducing latency and improving internet performance for users in Nigeria, offering faster, more reliable internet services for both individual users and businesses.
Starlink entered the Nigerian market in 2022 after obtaining various licenses, including an Internet Service Provider (ISP) license from the Nigerian Communications Commission (NCC), a Sales and Installation license, and an International Gateway license. The company has rapidly become the third-largest ISP in Nigeria as of the first quarter of 2024, indicating its significant impact on the country’s telecom sector.
Despite higher costs compared to local ISPs, Starlink has experienced a customer surge driven by its satellite service’s ability to provide connectivity in areas with poor internet coverage. With the completion of its ground stations, Starlink is set to further solidify its position as a major player in Nigeria’s telecom landscape, offering a new standard for internet connectivity across the country.
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