MTN Nigeria Communications Limited and Airtel Africa Limited reported foreign exchange losses of N479.11 billion following the June 2023 devaluation of the Naira.
In its financial report for the nine months of this year, MTN recorded a net foreign currency debt of N232.8 billion in foreign exchange losses due to the devaluation of the naira from 461 naira to the dollar in December 2022 to 777 naira to the dollar in September 2023. It was accounted for.
He noted that the foreign exchange loss for the same period in 2022 was N27.9 billion. The company further highlighted the need to rely heavily on letters of credit for its capital investment needs, given the scarcity of foreign exchange in the market.
The report said: “Given the prolonged foreign exchange shortage in the market, MTN Nigeria is seeking to fund the establishment of irrevocable confirmed letters of credit for network capital expenditures to sustain revenue growth.” We utilized our trading facilities to
“The foreign exchange losses recognized by the Company for the nine months ending September 2023 are lower than the amounts reported in the first half of 2023, measuring all trade lines offsetting the Naira-denominated cash cover provided to banks. After further analysis and review, we remeasured all trade lines to accurately exclude the Naira-denominated cash cover provided to banks.”
In Airtel’s case, it recorded an after-tax foreign exchange loss of $317 million.
The report said, “The after-tax loss was $13 million, mainly due to foreign exchange losses of $471 million recorded in pre-tax finance charges and the after-tax loss due to the devaluation of the Nigerian Naira in June 2023. This was caused by a foreign exchange loss of $317 million, which it stressed was classified as a “material impact.” special item. ”
Airtel expects its annual revenue to ultimately reach between $900 million and $950 million due to the impact of the naira devaluation.
Additionally, “an exceptional item of $471 million was due to derivative losses associated with the June 2023 devaluation of the Nigerian Naira (from 465 Naira/USD in May 2023 to 752 Naira/USD in June 2023). This is due to foreign exchange losses,” he added. This resulted in an extraordinary $154 million in tax revenue. Prior period tax exception items benefited from the initial recognition of a $42 million deferred tax credit in Kenya. ”
Like MTN, Airtel also had problems accessing dollars due to illiquidity.
The company said: “In some markets, we are facing a situation where the supply of foreign currency is constrained within local currency regimes. as well as our ability to pay foreign exchange in a timely manner to overseas suppliers.”
Foreign exchange shortages have been a major challenge in Nigeria recently, leading to significant depreciation of the local currency in the parallel market.
The Nigerian naira is one of the worst-performing currencies in the region, having lost 40% in value since the beginning of 2023, according to the World Bank.
Commenting on the dollar shortage in the country, the global bank said: “However, resistance to increasing pressure on the Nigerian naira and limited foreign currency supply at official counters have led to a resurgence of the parallel market premium.”
The telecommunications industry relies heavily on foreign exchange for its operations, as most of its equipment is imported.
Recently, the Chairman of the Licensed Telecommunications Operators Association of Nigeria, Gbenga Adebayo, tasked the government to introduce a special foreign exchange market for the industry.
He made the call recently when the telco met with the Minister of Communications, Innovation and Digital Economy, Dr. Bosun Tijani.
He said he would “work with relevant stakeholders, including the CBN, to develop intervention measures to support the telecommunications sector.” Such interventions could include the introduction of special foreign exchange windows for industry and the establishment of long-term, low-interest infrastructure financing schemes. ”
