Shareholders of MTN Nigeria are set to convene for an extraordinary general meeting to discuss strategies for addressing the capital decline experienced by the company in 2023. A notice from the corporation was submitted to the Nigerian Exchange Group, announcing that the Extraordinary General Meeting (EGM) will take place later this month in the city of Lagos. The notice for the Extraordinary General Meeting indicated that the only order of business would be to brainstorm and deliberate on potential strategies to rectify the company’s capital shortfall for the fiscal year ending in December 2023.
During the year in question, MTN Nigeria experienced a decrease in both its retained earnings and shareholder’s fund. This was a result of a net loss of ₦137 billion after tax, primarily caused by a foreign exchange loss of ₦740 billion. The telecoms company reported an increase in service revenue to ₦2.5tn, a 22% growth as highlighted in their documents filed with the NGX. However, despite this positive revenue result, the company still ended up with a loss after tax of ₦137bn.
The year had presented numerous obstacles for the company.
Thus, MTN Nigeria suffered a significant loss for the year, causing both the company’s retained earnings and shareholders’ fund to drop to negative values of ₦208bn and ₦40.8bn, respectively. In 2023, MTN Nigeria’s CEO Karl Toriola expressed that the year had presented numerous obstacles for the company. Issues such as inflation, currency devaluation, foreign exchange shortages, geopolitical disturbances, and cash shortages in Q1 due to naira redesign had all contributed to a difficult operating environment. These challenges had a significant impact on both customers and the business overall throughout the year.
In 2023, the naira experienced a major drop in value, leading to a significant increase in net forex loss of ₦740.4bn (compared to ₦81.8bn in 2022), impacting net finance costs and resulting in a reported loss of ₦137.0bn after taxes, a stark contrast to the restated profit after tax of ₦348.7bn in 2022. As a result, negative retained earnings and shareholders’ equity were recorded at the close of December 2023, with figures standing at ₦208.0bn and ₦40.8bn, respectively.
Their primary goal is to maintain their business momentum.
Toriola expressed concerns about the upcoming year, stating that they are expecting 2024 to be difficult due to the complications caused by high inflation and unpredictable foreign exchange rates. This uncertainty has led them to temporarily halt the projections for EBITDA margins in the medium term. However, they are still holding onto the predictions for service revenue in the same timeframe. Due to the unfavourable retained earnings seen at the close of 2023, the board of directors has decided against announcing a final dividend for the same year. Moving forward, their primary goal is to maintain their business momentum and increase their service revenue, while also enhancing the overall profitability of the company and fortifying their financial position.
Furthermore, their guiding principle is to approach all their endeavours with unwavering honesty, integrity, diligence, and professionalism. At MTN Nigeria, the Code of Ethics encapsulates their fundamental beliefs, offering ethical standards and necessary guidelines for both employees and collaborators to adhere to. This comprehensive document is applicable to all individuals affiliated with MTN, from employees to partners, regardless of their position within the company. By following the Code, all business decisions are influenced, ensuring adherence to ethical principles at every level.
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Additionally, their code of conduct is not a strict set of rules for every possible scenario or moral quandary, but rather a tool to steer them in the right direction. It reminds them to act with integrity, giving them the confidence to make ethical choices and stand by them. In situations where the Code does not provide specific guidelines, they choose to follow the principle of treating others the way they would like to be treated – the golden rule. When unsure of the correct course of action, it is recommended to seek advice from a more experienced staff member or the Compliance department.
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