Forex pushes Nigeria's Starcomms to 2008 net loss

Mergers, Acquisitions and Financial Results

Starcomms Plc, one of Nigeria's biggest mobile telecoms operators, swung to an 8 billion naira ($60 million) net loss last year due in part to the depreciation of the naira currency, the company said on Friday.

The company said it had recorded an unrealised foreign exchange loss of 3.64 billion naira on its dollar-denominated loans due to the naira's decline, helping drive it to a net loss from a 1.15 billion naira net profit in 2007.

'Demand for telecoms services in Nigeria in 2008 continued at very high levels,' Chief Executive Maher Qubain said.

'However, the second half of the year was characterised by worsening economic conditions, a declining exchange rate and declining average revenue per user (ARPU) across the industry.'

The naira fell by more than 20 percent against the dollar between late November last year and late January 2009 as falling world energy prices clouded the economic outlook and ate into foreign revenues in Africa's biggest oil exporter.

Starcomms, which operates on the CDMA platform and offers mobile, fixed, wireless voice and wireless broadband services, said new entrants to the CDMA sector had also embarked on aggressive sales campaigns with heavily subsidised handsets.

The company said the increased competition had hit profitability in the short term, but said business was improving again.