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Africa’s largest telecom service provider, MTN Group, under the leadership of Zimbabwean executive Ralph Mupita, has announced a gloomy outlook for its fiscal year 2023 results, projecting a potential profit plunge of up to 90 percent
This revelation follows a substantial financial setback faced by MTN Nigeria, the conglomerate’s most profitable subsidiary, which reported losses exceeding $80 million at the end of its fiscal year 2023.
The primary factor attributed to the challenging financial landscape is the devaluation of Nigeria’s currency, the naira. Karl Toriola, the Nigerian business executive leading MTN Nigeria, cited the devaluation as the catalyst for the downturn in the subsidiary’s financial performance.
Despite challenges, MTN Group under the leadership of Ralph Mupita has solidified its position as Africa’s leading telecom service provider, with a customer base exceeding 292 million across 19 markets.
Mupita’s strategic vision and execution have contributed to the expansion of MTN Group, earning him recognition as one of Southern Africa’s most influential CEOs. His minority stake in MTN is currently valued at $3.5 million.
Africa’s largest telecom provider faces financial challenges amid currency devaluation
However, with the challenging operating environment, the telecom giant is gearing up for headwinds, primarily driven by the significant devaluation of the Nigerian Naira against the US Dollar. MTN anticipates reporting a resilient underlying operational performance for the fiscal year 2023, but the financial results have been adversely impacted by the sharp devaluation of the naira, notably affecting MTN Nigeria’s financial performance.
The devaluation has led to higher operating and net finance costs for MTN Nigeria, influencing the overall financial performance of the MTN Group for fiscal year 2023.
The projected decline in earnings per share (EPS) is estimated to be between -90 percent and -70 percent, translating to a range of -R9.64 ($0.505) to -R7.5 ($0.393). This is in comparison to the reported EPS of R10.71 ($0.562) for the corresponding financial year ending Dec. 31, 2022.
Similarly, MTN anticipates a decrease in headline earnings per share (HEPS) within the range of -80 percent and -60 percent, equivalent to -R9.23 ($0.484) to -R6.92 ($0.362). This is against the reported HEPS of R11.54 ($0.604) for fiscal year 2022.
Despite the challenging outlook, the board of MTN Group aims to reassure investors by indicating an intention to declare a dividend in line with guidance, asserting a minimum ordinary final dividend of R3.3 ($0.173) per share for fiscal year 2023.
