(Bloomberg) -- MTN Group Ltd., Africa’s biggest wireless service provider by revenue, said full-year profit probably plunged as much as 90% as devaluations of Nigeria’s currency hit its financial performance.

Earnings per share likely fell to a range of 1.07 rand to 3.21 rand (6-17 US cents) in the year through December, from 10.71 rand in 2022, the Johannesburg-based company said in a statement Friday.

The naira plunged 49% in 2023. This year it has weakened a further 44%, making it the world’s worst performer against the greenback after the Lebanese pound among currencies tracked by Bloomberg.

Nigeria’s currency crisis, which stems from a scarcity of dollars, has resulted in an exodus of international businesses that need to repatriate earnings from one of Africa’s biggest economies. The nation, which has a rapidly growing and increasingly tech-savvy young population, has seen a number of policy missteps, corruption and an over-reliance on crude production fuel dysfunction in the economy. The middle class hasn’t expanded as much as expected, and companies are struggling in the current operating environment.

The constant depreciation of the currency, “that’s really the killer,” Christo Wiese, the former chairman of Shoprite Holdings Ltd. — the continent’s largest grocer, which left Nigeria in 2021 — said in an interview with Bloomberg TV. Foreign investors are waiting for “things to settle, for the economy to develop more, and for the government to develop correct policies,” he said.

MTN’s shares lost as much as 7.2% in early trading, out-pacing the 0.4% drop in the benchmark index. 

The telecommunications giant has about 77 million customers in Nigeria and historically derives about a third of its earnings from Africa’s most-populous nation.

“Most of the naira weakness will affect 2024, more than 2023, and it will take some time for MTN to recoup cost pressure from the consumer given regulatory restrictions in Nigeria,” said Peter Takaendesa, head of equities at Mergence Investment Managers. Still, MTN has been executing very well on its strategy performance, he said.

Despite the naira’s impact, the company managed to increase data traffic by 45%, MTN said in the statement. Mobile-money transaction volumes jumped 49%, and the company maintained strong free-cash-flow generation, demonstrating the underlying strength of the business, according to its filing.

Still, the company didn’t provide guidance on its earnings margins before interest, taxes, depreciation and amortization, said Mike Steere, an analyst with Avior Capital Markets Ltd. That increases “the uncertainty of what the impact of the devaluation will be going forward,” he said

MTN anticipates declaring a dividend of 3.30 rand a share for the 2023 financial year. 

(Updates with MTN comments in final paragraph. An earlier version of the story was corrected to show the percentage decline relates to earnings, not headline earnings.)

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