MTN, Airtel Set to Return to Profitability in 2025 After N1.1 Trillion FX Losses
- Despite recording major FX losses, the major telecom operators will still be able to declare profits by the end of 2025
- MTN Nigeria has had two consistent years of reporting losses, without paying a single dividend to shareholders
- Analysts have identified several factors that will push MTN and Airtel back into profitability
Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
After reporting huge losses, MTN Nigeria and Airtel Africa Plc are on track to achieve profitability again in 2025.
Analysts say that after the harsh economic headwinds of 2023 and 2024, the tides will change in 2025, and the major telecom operators will return to profitability.
Recall that both companies suffered huge losses following the depreciation of the naira in 2024.
Source: Getty Images
MTN Nigeria’s 2024 financial report shows a N400.44 billion loss after tax, almost a 200% increase from the N137 billion loss in 2023.
Foreign Exchange losses accounted for the bulk of these losses, with the telecom giant recording over N925 billion in FX losses for the year.
For Airtel Africa, FX losses at the end of the nine-month period in 2024 were about N235 billion (or $153 million), an impressive reduction from the $903 million FX losses in 2023.
Analysts predict a return to profitability
Reviewing the situation, Analysts at CSL Stockbrokers Limited, concluded that the worst is over for the telecom operators and 2025 is the year to return to profitability.
They noted that in addition to the FX losses, other factors like high inflation, rising energy prices and surge in operational costs affected the profitability.
MTN Nigeria, for instance, saw its Direct Network Operating Costs increase by 88.1% from N655.2 billion in 2023 to N1.23 trillion in 2024.
Factors that will drive the return to profitability
According to their review, the recent tariff hike provides some respite for the telecom operators to improve their balance sheet.
Recall that telecom operators have implemented a 50% tariff hike, as approved by the Nigerian Communications Commission.
CSL Stockbrokers opine that this will bring in more revenue for the operators and move their balance sheet into the black.
The companies have also made a move to reduce FX exposure. MTN Nigeria has revised its tower lease agreements with HIS and ATC to become primarily naira-based, and tied to a discounted US Consumer Price Index (CPI) with a cap on the Naira CPI escalator.
Both MTN and Airtel Nigeria recently cleared off a huge part of their dollar debts, thus reducing FX exposure.
Coupled with increased broadband adoption and expansion of 4G and 5G networks, the analysts expect it to push both companies back into profitability.
Shareholders expect profit after tariff review
Source: Getty Images
Daily Trust reports that shareholders are also looking forward to a better year, after two consecutive years with no dividends.
Mr. Boniface Okezie, leader of a shareholders’ group, said that the telecom operators have the responsibility of ensuring profitability to pay dividends in the 2025 financial year.
Meanwhile, MTN group recorded an increase in its final dividends from 330 cents per share to 345 cents, and the Group CEO, Ralph Mupita expressed optimism despite the FX volatility in Nigeria.
MTN, Airtel hedge against FX losses
In related news, MTN Nigeria and Airtel have taken steps to protect the company against huge FX losses in the future.
Both companies reduced their FX exposure by clearing a huge debt of $1.2 billion so that the journey back to profitability goes smoother.
MTN Nigeria and Airtel Africa suffered huge FX losses in 2024 amounting to N1.1 trillion due to the volatility of the foreign exchange market and depreciation of the naira.
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Source: Legit.ng
