MTN Nigeria’s Net FX Losses Hit Staggering N1.39tr

One of Nigeria’s leading telecommunication companies, MTN Nigeria’s foreign exchange loss since 2023 has now hit a whopping N1.396 trillion, the largest on record for any publicly quoted company in the country.

MTN recorded the most forex losses in 2023, when it reported a forex loss of N740.4 billion based on information in its audited accounts.

The losses have now resulted in the company’s shareholder’s fund falling to a negative N437 billion, with accumulated losses now N599 billion.

MTN’s forex losses were expected in 2024 after the exchange rate depreciation continued in the first quarter of the year.

As of 2023, the exchange rate used by MTN was about N910/$1. However, it worsened by the end of the third quarter, depreciating to about N1,309/$.

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This contributed to the company reporting a pre-tax loss of N575.69 billion. According to information contained in its 2024 Q1 results, the current foreign exchange rate loss was N695.7 billion, while the exchange rate gain was just N39.4 billion.

However, the actual realized exchange rate loss was N179.6 billion, while the unrealized portion was N476.76 billion.

Included in the realized loss (which are not actual losses but on paper) includes losses due to borrowing of N147.2 billion and trade payables of N38.1 billion.

In response to these challenges, MTN Nigeria is actively pursuing strategies to reduce its exposure to US dollar volatility.

One significant measure is the reduction of outstanding letters of credit obligations, which are largely tied to the company’s capital expenditure needs in foreign currencies.