MTN Nigeria Plc, a leading telecommunications company, has seen its market value drop below N4 trillion for the first time in years, following significant sell-offs triggered by disappointing earnings and a weak performance outlook.
In response to the financial downturn, shareholders offloaded MTN shares on the Nigerian Exchange, aiming to reduce their risk exposure.
Last week, MTN Nigeria's share price fell by over 5.26%, dropping from N200 to N190 on the local bourse. This decline brought the company’s market capitalisation down to N3.98 trillion, a steep 40.58% discount from its 52-week high.
Earlier this year, MTN’s share price had surged to N319.80. However, the company’s unaudited financial statements revealed substantial foreign exchange losses in the first half of 2024, primarily due to the naira's depreciation.
MTN Nigeria reported a staggering 95.2% increase in net foreign exchange loss, amounting to N887.7 billion, largely driven by its significant foreign currency-denominated lease liabilities, borrowings, and other payables. This contributed to a net loss of N519.1 billion in H1 2024, a sixfold increase from the N85.6 billion loss recorded in the same period last year.
As a result, MTN incurred a loss of N24.7 per share in the first six months of 2024, compared to a loss of N4.1 per share in H1 2023.
The company’s net finance costs surged by 96.0% year-on-year to N168.2 billion, while operating expenses jumped 43% to N422.7 billion, driven by a fourfold increase in software maintenance costs and a 122.2% rise in professional fees.
According to analysts at CardinalStone, MTN Nigeria's net asset value remains weak, with prolonged losses causing a 14.1x decline in shareholders’ equity to a negative N577.7 billion. Despite this, the telecom giant's total asset value saw a modest increase of 3.02%, although its return on assets remains negative at -32.1%.
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