MTN Restates Nigeria Foreign-Exchange Losses, Appeals Tax Demand

Loni Prinsloo, Bloomberg News

A logo outside the MTN Group Ltd. headquarters in Johannesburg, South Africa, on Monday, Aug. 14, 2023. MTN, Africa’s biggest wireless carrier, said Mastercard Inc. agreed to take a minority stake in its financial-technology business, which the company values at $5.2 billion. Photographer: Michele Spatari/Bloomberg , Bloomberg

(Bloomberg) -- The Naira’s plunge weighed on the earnings of Nigeria’s biggest wireless carriers.

MTN Group Ltd. increased its estimate of unrealized foreign-exchange losses in Nigeria and restated its earnings per share for the six months through June by 13%, while Airtel Africa Plc said its loss of $13 million was “driven largely by foreign-exchange.”

The relentless fall of the naira has made it Africa’s worst performer among currencies tracked by Bloomberg. Airtel reported a foreign exchange loss of $471 million. MTN’s shares dropped the most in almost three months.

Nigeria is MTN’s biggest market by subscribers and the Lagos-listed unit MTN Nigeria Communications Ltd. contributes more than a third of the group’s total revenue.

The unit recognized additional unrealized foreign-exchange losses on outstanding matured trade obligations and increased net finance costs for the six months through June, after incorrectly measuring them before, the company said in a statement on Monday.

Read more: MTN Restates Nigeria Foreign-Exchange Losses, Appeals Tax Demand

MTN’s woes increased after tax authorities asked it to pay an additional amount following an assessment. The company will challenge the order by the Nigerian Tax Tribunal to pay $47.8 million in taxes. The evaluation pertains to a value-added tax assessment for the periods covering 2007 and 2010-17, it said.

African phone companies have been pushing back on sporadic tax demands from countries and regulators on the continent.

Last week, six telecommunications chief executives — including MTN’s Ralph Mupita and Vodacom Group Ltd.’s Shameel Joosub — urged African leaders and policymakers to “rationalize” taxation on the mobile industry through the development of targeted fiscal policy reforms, according to an agreement signed in Rwanda.

MTN has a history of impasses with Nigerian authorities and was victorious in a dispute in the West African nation in 2020, when the government dropped a $2 billion claim for back taxes. More recently, Ghana had to abandon a $773 million back-tax bill against MTN that the company disputed.

MTN shares fell as much as 5.6%, the most since Aug. 2, and were 5.1% lower by 4:13 p.m. in Johannesburg.

--With assistance from Rene Vollgraaff.

(Updates MTN shares.)