MTN Nigeria has reported that the naira devaluation also impeded the company’s financial growth in the second quarter of 2023.
In a comment included in its second quarter of the financial statement released on Friday, MTN Nigeria disclosed it recorded an unrealised forex loss of N131.5 billion.
This increased by N117.9 billion or 866.9 per cent compared to the N13.6 billion forex loss reported in the first half of 2022.
“Net finance costs increased by 164.3 per cent due to increased borrowings and an unrealised forex loss of N131.5 billion (H1 2022: N13.6 billion) on our net foreign currency liabilities following the significant devaluation of the Naira.
“Trade line facilities were required to establish letters of credit to fund our capex program given the paucity of forex. The investments enabled us to enhance the capacity and coverage of our network and sustain revenue growth in line with our guidance,” MTN Nigeria stated.
The company said the N131.5 billion unrealised forex loss will not end the naira devaluation impact, as a full adverse effect will occur in the second half (H2) of 2023. Although MTN Nigeria said the naira devaluation will positively impact its operations in the medium and long term.
“The immediate impact on our results for H1 was the unrealised forex losses included in our net finance charges. There was no material impact on the EBITDA margin due to the nature of our tower contracts which require us to make quarterly payments at the beginning of each quarter.
“The exchange rate is adjusted based on the reference rate at the end of the preceding quarter for some of the contracts and the average rate in the quarter for others. As a result, the full impact is expected to kick-in in H2,” the statement reads.
In a related development, Airtel Africa recorded a $151 Million foreign exchange loss in the second quarter of this year.