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MTN and its FY2023 Financial Results Abracadabra

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By Abdullahi Taminu Bida

MTN Nigeria Communications Plc (MTN Nigeria), the leading telecommunication service provider in the country, on Thursday, 29 February, 2024, submitted its full-year audited report for the year ended 31 December, 2023 to the Nigerian Exchange (NGX). The report showed very impressive highlights like growths in total subscriber base, active data users, active mobile money (MoMo PSB) wallets, service revenue and earnings before interest, tax, depreciation and amortization (EBITDA). Despite all these positive highlights in the Statement of Accounts, the media and most analysts, as the MTN Nigeria would wish, ran with the forex loss of N740.4 billion as well as the loss before tax of N177.8 billion.

Karl Toriola, Chief Executive Officer, MTN Nigeria

According to MTN Nigeria, the losses are as result of “rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in Q1 arising from a redesign of the naira. Karl Toriola, the Chief Executive Officer of the company, noted that “MTN Nigeria’s operations are exposed to foreign currency volatility on its operating and capital expenditure. The most significant of these exposures relates to the tower lease costs, which comprised the bulk of the 45-50 percent foreign currency exposure in our operating expenses in 2023.” Specifically, the company attributed the poor financial performance for the year under review mainly to the foreign exchange loss of N740.4 billion as a result of a 96.7 percent movement in the exchange rate from N461/$1 in December 2022 to N906/$1 in December 2023.

From media reports many of the analysts seem to look at the MTN Nigeria’s 2023 Financial reports from the prism of the company – harsh operational environment, unfavourable government policies and the general macro-economic conditions. They seem to be so convinced by the jaundiced narrative the telecom company has deliberately crafted to hoodwink stakeholders to its side that they barely look at the submitted report critically.

To start with, MTN Nigeria listed on the floor of the Nigerian Exchange in 2019 as part of its bargain with the government to have its $5.2 billion fine, for failure to disconnect its subscribers who were yet to link their National Identification Numbers to their telephone lines, slashed. Prior to the listing, MTN Nigeria was a private company and had no disclosure requirements unlike now, as a publicly quoted company, it is required to meet the disclosure requirements including the submission of quarterly results.

Let us highlight some of the items as disclosed in the report. The Loss after tax was N137.0 billion due to net forex loss; Profit after tax (PAT), adjusted for the net forex loss, decreased by 14.3 percent to N344.5 billion; Earnings per share (EPS) declined to negative N6.38 kobo (N16.56 kobo adjusted for the net forex loss, down 14.1 percent); the Net loss for the year resulted in a depletion of its retained earnings and shareholders fund to negative N208.0 billion and N40.8 billion, respectively; the Capital expenditure (capex) increased by 13.2 percent to N571.0 billion; and the company’s liabilities and assets were N3.22 trillion and N3.18 trillion respectively.

The report, as indicated, showed that the company’s liabilities are bigger than its assets, an admission that MTN Nigeria is technically insolvent. The reality is that this insolvency would remain for a long time without shareholder funding and may trigger default. This also throws up the going concern questions. How can MTN Nigeria’s auditors sign off the on the going-concern assessment of the company with such reality – a case of financial illiteracy or poor oversight?

Also, the issue of lease agreements leaves plenty room for suspicion. Is attributing an item that, according to the company, constitutes 45-50 percent of its foreign currency exposure without naming the service provider a deliberate ploy to conceal pertinent facts? It is a known fact that MTN has large ownership stakes in the companies that provide these lease services and the ‘losses’ the company posts as a result of the forex fluctuations, it ‘gains’ in form of returns on investment.

Similarly, the report indicated that MTN Nigeria changed its “measurement” of FX loses from “realized FX differences on dollar indexed leased” to the N/US$ spot exchange rate at the end of each reporting period. This, it claims, is in line with the IAS 21 and FIRS 16 and led to adjustments of 2021 and 2022 results. Why would MTN Nigeria limit the restatement of its lease liabilities to 2021 and 2022 only and not 2020 and 2019 financials when it got listed on the NGX? It is also curious that forex for the H1 2023 was not restated – when objectively there was nothing that could have triggered the IFRS 16 treatment to be altered in H2. In fact, the report showed that MTN Nigeria did a restatement on the H1 FX related transaction that was undertaken in October 2023.

These may be pointers to a possibility of sharp practices and willful concealment on the part of MTN Nigeria in contravention of the extant disclosure rules of the Exchange. This possible concealment, probably aimed at avoiding tax liabilities and/or shareholder obligations, should be of interest to industry stakeholders, in particular and Nigerians in general. MTN Nigeria’s over two-decade operations in Nigeria leaves much to be desired as there have been cases that border around corporate governance such as tax defaults, illegal repatriations of profits and other corporate vices.

Abdullahi Taminu Bida, writes for Abuja


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Ugo Onwuaso is an ICT enthusiast. He believes technology should be used for general good. He holds a Master of Public Administration (MPA) degree from the Lagos state University. Dear Reader, Your support matters. But we believe that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. That is why, we have devoted our energy to independent reportage of technology and finance and how they affect lives. Our incisive and analytical view of how technology news affects the daily life help individuals and organizations make up their minds. Quality journalism costs money. Today, we're asking that you support us to do more. Kindly support our effort to deliver technology and finance journalism to everyone in the world. Donate as little as N1,000. Bank transfers can be made to: UBA Plc 1017156876 Communication Week Media Ltd

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Nigeria’s Public Debt Now N121trn – DMO

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Debt Management Office (DMO) says Nigeria’s total public debt has reached N121.67 trillion within three months.

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The Cable reports that this figure represents an increase of N24.33 trillion or 24.99 percent from the N97.34 trillion as of December 2023.

Nigeria’s public debt profile consists of the federal and subnational governments’ domestic and external debt stocks — the 36 states and the federal capital territory (FCT).

According to the DMO, the increase was primarily due to new domestic borrowing by the federal government to partly fund the deficit in the 2024 budget as well as disbursements by multilateral and bilateral lenders.

“Total domestic debt was N65.65 trillion (USD46.29 billion) while total external debt was N56.02 trillion (USD42.12 billion). Excluding naira exchange rate movements in Q1 2024, only the domestic debt component of total public debt grew from N59.12 trillion on December 31, 2023, to N65.65 trillion on March 31, 2024.

“The increase was from new borrowing to part-finance the 2024 Budget deficit and securitization of a portion of the N7.3 trillion Ways and Means Advances at the Central Bank of Nigeria.

Whilst borrowing, as provided in the 2024 Appropriation Act, will continue, we expect improvements in the government’s revenue to enhance debt sustainability.”

On June 13, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced the approval of two major “financial support packages” by the World Bank — valued at $2.25 billion. In May, the Bureau of Public Enterprises (BPE) said the federal government has secured a $500m World Bank loan to boost electricity distribution in the country.

Prior to this, the federal government had received $750 million from the World Bank for humanitarian and social reforms and $1.5 billion for its economic stabilisation plan.


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Icasa Orders Shutdown of StarSat, StarTimes SA Arm over License Controversy

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Independent Communications Authority of South Africa (Icasa) has declined to renew the license of On Digital Media, the operator behind StarSat, the South African branch of StarTimes Media.

Icasa Orders Shutdown of StarSat, StarTimes SA Arm over License Controversy

The decision, communicated in a letter to On Digital Media, mandates the company to cease operations by September 18, 2024, leaving the reasons for this decision and the steps required to secure a new license unclear.

Despite the shutdown order, Debbie Wu, CEO,  StarSat assured that the company will not be closing its operations anytime soon and is actively liaising with Icasa to find a resolution.

“We can assure you and the public that On Digital Media/StarSat will not be closing its operations anytime soon” Debbie Wu, CEO, On Digital Media.

“There’s been no notice to staff and StarTimes is still selling StarSat decoders to new customers,” an insider told TVwithThinus.

Reports that Icasa hadn’t renewed StarSat’s licence surfaced in early June 2024.

Icasa claimed it had sent a letter in mid-March to Wu and Ronald Reddy, general manager for legal, risk, and compliance, On Digital Media indicating it may issue a statement to inform subscribers, content providers, and financial stakeholders about the shutdown.

“Take note that Icasa may publish a notice on its website and/or in the Government Gazette advising affected subscribers, content providers and stakeholders about the winding up of ODM’s broadcasting services“, the regulator said.

Icasa clarified that it does not have the mandate to consider transfer or renewal applications for expired licenses and instructed On Digital Media to share its plan for notifying subscribers, content providers and stakeholders about the service cessation.

Wu stated that the company is exploring all regulatory and legal issues surrounding its licensing and reiterated that StarSat will continue its operations for the foreseeable future.

“Should such an event materialise, which we doubt will happen, we will respect our obligation in terms of the law to notify all interested parties,” Debbie Wu said, according to TVwithThinus.

 


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Climate Action Africa Reinforces Africa’s Urgency for Climate Change @CAAF24 Event in Lagos

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Climate Action Africa Forum 24 (CAAF24) held in Lagos, Nigeria marked a pivotal moment in the global effort to address climate change, organized by Climate Action Africa (CAA), a leading environmental advocate in Africa. CAAF24 aims to galvanize action and underscore the urgent need for climate action across industries and communities across Africa.

The event, held at the prestigious Landmark Center, brought together a diverse array of stakeholders including government officials, business leaders, academics, civil society representatives and the media.

The theme of this year’s forum, “Green Economies, Brighter Futures,” highlights the imperative for immediate and collective action in mitigating the effects of climate change in Africa and achieving global sustainability goals.

“CAAF24 serves as a critical platform for dialogue and collaboration,” said Grace Oluchi Mbah, Co-Founder and Executive Director of CAA.

“With the event, we aim to increase education and awareness on climate change, showcase innovations and projects driving Africa to a sustainable future, and more actively contribute to the expansion of Africa’s green economy.”

The program featured addresses from Her Excellency, Madame Ramatoulaye Diallo Ndiaye, Former Minister of Culture Mali and Founder and CEO of the Great Green Wall of Africa (GGWoA) Foundation who was the special keynote speaker.

There were breakout sessions for panel discussions and workshops that focused on key issues such as the potential of forests and carbon credits, climate financing, Nigeria’s carbon market activation, mobilizing private capital for climate-positive investments in Africa, building resilient and livable African Cities and more. Sessions were designed to encourage interactive participation and exchange of ideas among participants from diverse backgrounds and sectors.

In addition to formal sessions, CAAF24 included networking opportunities and showcased the selection of outstanding innovations from over 800 registerations through the Deal Room, a platform that connected high-impact climate innovators in Africa with potential investors seeking to accelerate sustainable solutions.

Other highlights at CAAF24 were the audacious launch of the Billion Trees for Africa Initiative as part of CAA’s community programs and the unveiling of the Pan-African Green Economy Program (PAGE), a partnership with IDEA AFRICA and the Founder Institute that seeks to grow a new generation of 5,000 green innovators across Africa by 2035.

The selection of Omoniyi Praise (1st position), Treasure Nwosu (2nd position) and Alabi Abimbola (3rd position) as winners for the Climate Champion Quest organised by STEAM Funfest also stood out at CAAF24.

As Africa faces increasingly severe climate impacts, CAAF24 is a platform that is committed to unifying the participation of diverse stakeholders in advancing and achieving climate action in Africa. By reinforcing the urgency of climate change through meaningful dialogue and collaboration, CAAF24 inspires concrete steps towards a more sustainable and equitable future for all.


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