MTN, Airtel target huge profit in 2025, thanks to 50% tariff hike

• Despite signaling large FX losses, the large telecom operators volition inactive beryllium capable to state profits by the extremity of 2025
• MTN Nigeria has had 2 accordant years of reporting losses, without paying a azygous dividend to shareholders
• Analysts person identified respective factors that volition propulsion MTN and Airtel backmost into profitability

Legit.ng writer Ruth Okwumbu-Imafidon has implicit a decennary of acquisition successful concern reporting crossed integer and mainstream media.

After reporting immense losses, MTN Nigeria and Airtel Africa Plc are connected way to execute profitability again successful 2025.

Analysts accidental that aft the harsh economical headwinds of 2023 and 2024, the tides volition alteration successful 2025, and the large telecom operators volition instrumentality to profitability.

Recall that some companies suffered immense losses pursuing the depreciation of the naira successful 2024.

The 2 biggest telecom operators successful Nigeria - MTN and Airtel - took the biggest blows from the naira devaluation, losing N1.1 trillion successful 2024. Photo credit: Daniel Balakov
Source: Getty Images

MTN Nigeria’s 2024 fiscal study shows a N400.44 cardinal loss aft tax, astir a 200% summation from the N137 cardinal nonaccomplishment successful 2023.

Foreign Exchange losses accounted for the bulk of these losses, with the telecom elephantine signaling implicit N925 cardinal successful FX losses for the year.

For Airtel Africa, FX losses astatine the extremity of the nine-month play successful 2024 were astir N235 cardinal (or $153 million), an awesome simplification from the $903 cardinal FX losses successful 2023.

Analysts foretell a instrumentality to profitability

Reviewing the situation, Analysts astatine CSL Stockbrokers Limited, concluded that the worst is implicit for the telecom operators and 2025 is the twelvemonth to instrumentality to profitability.

They noted that successful summation to the FX losses, different factors similar precocious inflation, rising energy prices and surge successful operational costs affected the profitability.

MTN Nigeria, for instance, saw its Direct Network Operating Costs summation by 88.1% from N655.2 cardinal successful 2023 to N1.23 trillion successful 2024.

Factors that volition thrust the instrumentality to profitability

According to their review, the caller tariff hike provides immoderate respite for the telecom operators to amended their equilibrium sheet.

Recall that telecom operators person implemented a 50% tariff hike, arsenic approved by the Nigerian Communications Commission.

CSL Stockbrokers opine that this volition bring successful much gross for the operators and determination their equilibrium expanse into the black.

The companies person besides made a determination to reduce FX exposure. MTN Nigeria has revised its operation lease agreements with HIS and ATC to go chiefly naira-based, and tied to a discounted US Consumer Price Index (CPI) with a headdress connected the Naira CPI escalator.

Both MTN and Airtel Nigeria precocious cleared disconnected a immense portion of their dollar debts, frankincense reducing FX exposure.

Coupled with accrued broadband adoption and enlargement of 4G and 5G networks, the analysts expect it to propulsion some companies backmost into profitability.

Shareholders expect nett aft tariff review

MTN Nigeria shareholders are already antsy aft not receiving dividends for 2 years. Photo credit: GSMA/MTN Nigeria
Source: Getty Images

Daily Trust reports that shareholders are besides looking guardant to a amended year, aft 2 consecutive years with nary dividends.

Mr. Boniface Okezie, person of a shareholders’ group, said that the telecom operators person the work of ensuring profitability to wage dividends successful the 2025 fiscal year.

Meanwhile, MTN radical recorded an summation successful its last dividends from 330 cents per stock to 345 cents, and the Group CEO, Ralph Mupita expressed optimism contempt the FX volatility successful Nigeria.

MTN, Airtel hedge against FX losses

In related news, MTN Nigeria and Airtel person taken steps to support the institution against huge FX losses successful the future.

Both companies reduced their FX vulnerability by clearing a immense indebtedness of $1.2 cardinal truthful that the travel backmost to profitability goes smoother.

MTN Nigeria and Airtel Africa suffered immense FX losses successful 2024 amounting to N1.1 trillion owed to the volatility of the overseas speech marketplace and depreciation of the naira.

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Source: Legit.ng