MTNN Downgrades Stock Rating to “HOLD” Following 2023FY Financial Results, Forecasts Continued Pressure Amid Currency Devaluation

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  1. Following the publication of MTNN’s 2023FY financials, which revealed significant challenges stemming from foreign exchange devaluation, the telecommunications giant faces downward revisions in its outlook for 2024E. Despite historical resilience, the company reported its first loss since 2015, driven by unexpected foreign exchange losses. As a response, analysts at [insert firm name] downgraded MTNN’s stock rating to “HOLD” and adjusted the target price downward by 22.5% to NGN245.47. The revision reflects expectations of further currency devaluation and ongoing margin pressures. While MTNN’s fundamentals remain robust, with a projected increase in subscriber base and revenue growth, uncertainties around currency stability and escalating costs prompt caution among investors.



MTNN, Nigeria’s leading telecommunications provider, faces challenges following the publication of its 2023FY financial results. Notably, the steep foreign exchange devaluation in 2023 led to a decline in MTNN’s EBITDA margin by 448 basis points, primarily due to adjustments in tower contract costs to the higher reference FX rate. The unexpected increase in foreign exchange losses, amounting to NGN740.43 billion, far exceeded analysts’ estimates, resulting in the company’s first loss since 2015 when regulatory fines impacted its bottom line.




In response to these developments, analysts downgraded MTNN’s stock rating to “HOLD” and revised the target price downward by 22.5% to NGN245.47 for 2024E. This adjustment reflects expectations of further currency devaluation and ongoing margin pressures. Despite the challenges, MTNN’s fundamentals remain strong, with a projected 3.3% year-on-year increase in subscriber base to 82.33 million and anticipated growth in data and voice revenue.





The telecommunications giant continues to invest in expanding its data network coverage and capacity to capitalize on the Nigerian market’s untapped potential. However, the projected EBITDA margin for 2024E is lower at 45.2%, reflecting heightened cost pressures from higher FX pricing on tower contracts and energy costs in an inflationary environment.




Analysts emphasize the importance of monitoring currency movements as a key risk to their estimates in the short to medium term. With MTNN trading at a 2024E EV/EBITDA of 4.9x, investors may not have fully priced in the near-term pressures on the company’s fundamentals and the possibility of another year with no dividends. However, analysts maintain that the current relatively low valuation of MTNN may be short-term, expecting a normalization of numbers from 2025E onwards, potentially leading to a re-rating of the stock.

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