‘Forex pressure to hit operators earnings’

Foreign exchange (forex) liquidity pressures are expected to lead to a rise in forex-linked costs to and exert downward pressure on the earnings of telecom operators, a report by FBNQuest has said.

It said MTNN disclosed that the NAFEX rate of N385/US$ will be applied to dollar-linked tower costs (vs. CBN’s official rate of N360 previously). The rate was only recently reviewed to N360/US$ in April (from N307 previously).

“However, we believe that the revenue growth from the surge in data traffic will more than offset the rise in costs. Regardless, our estimates are conservative. For MTNN, we forecast 2020 revenue and PBT growth of 13per cent y/y and six per cent y/y respectively,” it said.

It however believes that the telecoms sector is set to take a leading role in the government’s effort to diversify the economy. On the back of significant investments by the mobile networks, the sector’s contribution to the gross domestic product (GDP) has risen steadily from c.7.7per…

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