MTN to cut costs, hike prices at Nigeria unit

MTN Group’s Nigeria unit is working on restoring its profitability and strengthening its balance sheet through managing costs and tariffs after Africa’s biggest telecoms operator reported a slump in annual profit yesterday.

The drop in group profit was due to a sharp devaluation in the Nigerian naira, which pushed MTN Nigeria, the group’s biggest business, to a loss after tax of 137 billion naira (R1.8 billion) and negative equity.

South Africa-headquartered MTN said its headline earnings per share (heps) – one of the main profit measures – tumbled by 72.3% to 315 cents for the year ended on 31 December, from a restated 1 137 cents a year earlier.

Adjusted heps declined by 9.5% to 1 203 cents.

Nigeria’s central bank in June adopted new forex rules that MTN said had since led to an approximately 96.7% devaluation in the naira as of December.

“I think on Nigeria, we’re anticipating that we’ll continue to have some macro headwinds,” group CEO Ralph Mupita said in a press call. “We’re anticipating that the naira will remain volatile for some time.”

MTN is working with regulators across several of its markets, including in Nigeria, to get approval to increase tariffs for voice and data.

“Given our expense profile in Nigeria, we need some tariff increases to mitigate the cost of running the networks,” Mupita said.

The majority of network expenses are driven by contracts

MTN Nigeria has with cell tower operator IHS Holding and others, such as ATC.

The operator is engaging with these tower companies to renegotiate some of its tower contracts to mitigate the jump in costs due to the naira’s devaluation.

A third area of focus is dollar exposure on its balance sheet, Mupita said.

The group as a whole has a three-year R7 billion to R8 billion expense efficiency target. Nigeria will be a big part of this exercise, Mupita added.