Nigeria’s state oil giant, NNPC, reported a remarkable 28% increase in its annual net profit, reaching a total of 3.297 trillion naira ($2.14 billion) for the year. The company also declared a dividend of 2.1 trillion naira, marking a significant financial milestone despite ongoing challenges in the operational and economic landscape.
“Despite the inherent challenges of our operational and economic environment, we have improved the productivity and financial performance of this great company,” NNPC’s Chief Financial Officer, Umar Ajiya, emphasized. He further noted that the company’s robust performance is a testament to its resilience and strategic approach in navigating complex market conditions.
NNPC is also setting ambitious goals, targeting crude oil production of 2 million barrels per day by the end of the year. This target is bolstered by recent successes in combating crude oil theft and pipeline vandalism, which have historically plagued the industry. Earlier in the month, Nigeria’s Navy Chief, Emmanuel Ikechukwu Ogalla, confirmed that the country’s oil output had increased to between 1.6 million and 1.7 million barrels per day, thanks to enhanced security measures.
Meanwhile, Africa’s largest telecom operator, MTN Group, faced a challenging half-year, reporting a loss before tax of 9 billion rand ($507 million) for the period ending June 30. The company attributed this downturn primarily to the devaluation of the Nigerian naira and operational difficulties in Sudan. CEO Ralph Mupita stated, “The further devaluation in the naira against the U.S. dollar and the ongoing conflict in Sudan had the most significant impact on our reported results.”
MTN has been working on a series of initiatives aimed at restoring profitability, including renegotiating tower lease terms in Nigeria with operator IHS. These new commercial terms are expected to yield annual cost savings of between 100 billion to 110 billion naira ($71 million) and improve the EBITDA margin by 4 to 6 percentage points. However, Mupita cautioned that while these efforts are positive, they are “not a silver bullet in addressing negative equity.”
MTN Group, which operates across 18 African markets with 288 million customers, also saw a 20.8% decrease in group service revenue, which stood at 85.3 billion rand. Despite this, in constant currency, the group’s service revenue actually rose by 12.1%. Mupita highlighted the company’s progress in its non-core asset sales program, having raised 21.7 billion rand of the targeted 25 billion rand.
In addition to these financial manoeuvres, MTN reduced its stakes in MTN Ghana and MTN Uganda during the reporting period, securing a combined 1.7 billion rand. Further stake sales in Ghana, Cameroon, Ivory Coast, and Nigeria are also planned as part of the company’s strategic realignment.
The financial challenges faced by MTN Group, particularly due to the devaluation of the Nigerian naira, have significant implications for its operations in Nigeria. The devaluation has led to a substantial loss before tax, impacting the company’s overall profitability. Despite this, MTN is actively working on initiatives to restore profitability, such as renegotiating tower lease terms in Nigeria, which are expected to yield significant cost savings and improve the EBITDA margin.
While MTN is facing significant financial challenges, it is unlikely to completely reconsider its operations in Nigeria. Instead, the company is focusing on strategic adjustments and cost-saving measures to navigate the economic difficulties. Nigeria remains a crucial market for MTN, given its large customer base and potential for growth. The company’s efforts to renegotiate terms and reduce stakes indicate a strategic approach to managing its operations rather than an exit strategy.
MTN’s commitment to Nigeria is evident through its ongoing initiatives to improve financial performance and adapt to the challenging economic environment. While the devaluation of the naira poses significant challenges, MTN’s strategic measures suggest that it will continue to operate in Nigeria, albeit with adjustments to its business model to ensure sustainability and profitability.
