MTN Blames Currency Fluctuation in Nigeria for Fall in Profit

MTN has attributed 15% fall in its profit and slide in the company's share to fluctuation in Nigeria's currency. In a statement, MTN said its headline earnings per share (EPS) will be between 10% and 15% lower for the six months through June 30 compared with the corresponding period in 2014.

A Bloomberg report said MTN's stock has declined by 8.2% this year, compared with a 10% gain by Vodacom, South Africa's market leader.

Bloombery added that "by yesterday morning 9:54am MTN's stock lost 4.8 percent to 202.85 rand in Johannesburg after dropping as much as 5.9 percent, making it the biggest intraday decline since March 23. The slide reportedly wiped more than 20 billion rand ($1.6 billion) off MTN's market value."

In its statement MTN added that its earnings per share excluding one-time items declined to 6.20 to 6.56 rand in the six months ended June 30, compared to a year earlier when earnings were 7.29 rand a share.

Furthermore, the value of the company's shares fell by 5% when it told investors to be expecting a decline in first-half earnings.

The telecoms giant said the adverse exchange rate in Nigeria especially hurt its international business, negatively affecting its operations by a forecast drop of between 10 and 15% in attributable earnings per share for the six months to end-June, over the same period in 2014.

The impact of the fluctuation in Nigeria's currency on MTN's earnings had a deeper impact on its local operator, with MTN Nigeria only generating 27% of sales in South Africa in the previous fiscal year.

However, both Nigerian and South African currencies were hit by fluctuations with Bloomberg reporting the rand had fallen about 5% against the dollar in the first six months of 2015.

The network's operations was also threatened in Nigeria by a recent fuel scarcity while in the northern region of the country, the activities of the Boko Haram terrorist group negatively affected the telco operations and some of its installations were destroyed.