MTN expects profits to fall up to 30% as Iran investment takes a hit

MTN's shareholders are staring at a 30% profit decline, a harsh reality that will hit Nigerian pockets particularly hard. For MTN's 240 million subscribers in Nigeria, the country's largest telecom operator, this news means higher costs and potentially lower returns on their investments. MTN's Nigerian customers are just one of the many groups that stand to lose from the company's Iran investment woes.

MTN's 49% stake in Irancell, an Iranian telecom operator, has taken a massive hit due to geopolitical and economic conditions. The company has taken a material impairment on its investment, which has dragged down headline earnings despite a stronger underlying performance. This write-down has accounted for 213 cents of the difference between H1 2026 earnings per share and headline earnings per share, a significant blow to the company's profits.

The war in Iran has led to hyperinflation and foreign exchange losses, further exacerbating MTN's problems. These non-operational items have added to the company's woes, with 178 cents in non-operational items recorded in H1 2026, up from 12 cents in H1 2025. This includes a 52-cent impact from hyperinflation and 126 cents from foreign exchange losses.

MTN's underlying earnings are expected to rise by up to 23%, but the impairment losses and other non-operational items have dragged reported earnings lower. This means that the company's headline earnings per share will fall by as much as 30%, a stark contrast to the stronger underlying performance. MTN's South African business is also facing tougher conditions, while its fintech business in Nigeria is under pressure due to regulatory issues.

Despite these challenges, MTN remains optimistic about Nigeria's growth prospects. The company believes that its operations in Nigeria, Ghana, and Uganda delivered solid operational performance during the first half. However, the regulatory suspension of airtime lending is putting pressure on MTN's fintech business in Nigeria.

MTN's 30% profit decline is a wake-up call for investors and regulators alike. It highlights the risks associated with investing in countries with unstable economies and geopolitical tensions. For MTN's shareholders, this means a sharp decline in their returns on investment. For Nigerian customers, it means higher costs and potentially lower returns on their investments.

I predict that MTN will take a more cautious approach to investing in countries with high political and economic risks. The company will likely focus on its core telecom business and divest from non-core assets. In Nigeria, MTN will need to navigate the regulatory suspension of airtime lending and find new ways to grow its fintech business. As for shareholders, they will need to reassess their investment strategy and consider the risks associated with investing in MTN.

MTN's 30% profit decline is a harsh reality that will hit Nigerian pockets hard. The company's Iran investment woes are a reminder of the risks associated with investing in countries with unstable economies and geopolitical tensions. MTN will need to navigate these challenges and find new ways to grow its business in Nigeria and beyond.