MTN Nigeria has reported a N400 billion post-tax loss in 2024, marking a significant financial setback.
For a company that was once a favorite among investors, this downturn raises pressing questions about when profitability will return and whether shareholders can expect dividends anytime soon.
MTN’s 2024 financial results reflect a perfect storm of macroeconomic headwinds, rising finance costs, and foreign exchange losses.
However, the company has outlined a recovery strategy, one that hinges on tariff adjustments, cost efficiency, and financial restructuring. But will it be enough?
What went wrong in 2024?
MTN’s troubles in 2024 were rooted in a combination of macroeconomic headwinds and internal cost pressures:
- Soaring costs: Despite strong revenue growth, operating expenses surged, weighing heavily on profitability. EBITDA margin dropped by 9.6% to 39.1%.
- Foreign exchange losses: The naira devaluation wiped out N925 billion from MTN’s books, turning what could have been a profitable year into a record loss.
- Rising Finance Costs: Even as gross debt declined to N972.9 billion (from N1.18 trillion), finance costs jumped due to increased lease interest expenses from MTN’s revised tower lease agreements.
MTN’s CEO summed it up succinctly:
“Our financial performance was significantly impacted by the challenging operating environment, particularly currency devaluation and rising interest rates.”
Even with a strong revenue growth of 36% to N3.3 trillion, the surge in costs wiped out profitability, turning shareholders’ funds to a negative of N458 billion,
The big question: When is profit coming back?
Faced with these challenges, MTN believes that a combination of a 50% tariff hike, cost reductions, and financial restructuring gives it a strong foundation for recovery. The company’s official outlook reflects this confidence:
“The recent approvals of new tariffs by the regulator will enable us to sustain the required investments in our networks, which are needed to enhance customer experience and industry sustainability.”
It further highlighted several additional measures taken to navigate its financial challenges beyond the tariff hike.
In its official statements, the company detailed strategies aimed at stabilizing operations and returning to profitability, including the following:
- Renegotiating Tower Lease Agreements: Adjusting contracts with IHS led to N113.8 billion in operational cost savings, improving EBITDA margins.
- Reducing FX exposure: The company aggressively cut its outstanding US-dollar liabilities from $416.6 million to $20.8 million, minimizing currency volatility risks.
- Expense efficiency initiatives: Implementing cost-cutting measures saved N41.9 billion in 2024.
- Optimizing Capital Expenditure: MTN deployed N443.5 billion in capex, lowering its intensity to 13.2% from 18.2% in 2023, ensuring more efficient capital allocation.
The company is now projecting the following for 2025:
- Service revenue growth of at least 45%.
- EBITDA margin recovery to at least mid-40%.
- A full reversal from negative shareholders’ equity.
Additionally, over the medium term, the company aims to achieve the following:
- Service revenue growth of at least 20%.
- EBITDA margin of at least 50%.
- A normalization of capex intensity
Projected 2025 numbers based on a 50% tariff hike
Using 2024 as a baseline, a 50% tariff hike could push MTN’s key financials to a more positive trajectory:
- Revenue: If service revenue grows by 45%, MTN’s top line could rise to N4.8 trillion in 2025.
- EBITDA: With an expected mid-40% margin, EBITDA could rebound to N2.2 trillion, a significant improvement from N1.3 trillion in 2024.
- Net Profit: Assuming cost pressures ease and FX losses stabilize, MTN could swing back to profitability, with a projected PAT of N500–N600 billion, a sharp turnaround from 2024’s deep losses.
The Big question: Can MTN deliver on its recovery promise?
MTN’s turnaround plan is ambitious, but execution remains key. The 50% tariff hike, cost reductions, and financial restructuring offer a pathway back to profitability.
However, macroeconomic volatility, exchange rate risks, and consumer price sensitivity remain critical uncertainties that could derail recovery efforts.
The biggest tailwind here is the 50% tariff hike, but the critical unknown remains price elasticity. Will Nigerians continue purchasing data and airtime at higher prices, or will they cut back?
Nigeria is currently grappling with:
- Rising unemployment and stagnant wages could limit discretionary spending.
- Intensifying competition, particularly from Airtel, Glo, and 9Mobile, pressuring market share and pricing power.
If demand declines sharply, MTN’s revenue projections could fall short, it may worsen its financial position and recovery.
Investor sentiment and market outlook
- MTN’s share price has shown resilience, recovering from a 24% YtD loss in 2024 to a 32% gain by February 2025, ranking it 23rd on the NGX.
- This signals renewed investor confidence, but for how long?
- Overall, for now, MTN remains a high-risk, high-reward stock. Investors will need to weigh short-term market volatility against long-term growth potential.
- The next few quarters will be crucial in assessing whether MTN’s strategy is robust enough to restore profitability and deliver value to shareholders.
