MTN Nigeria's share price skyrocketed to ₦256 on Tuesday, marking a 9.87% increase, following the approval of a 50% hike in telecom tariffs by regulators. This significant surge reflects investor confidence in the company's profitability, which has been struggling with losses for the past two years.

The approved tariff hike is expected to reduce the impact of macroeconomic conditions on MTN Nigeria's profitability. The company has been focused on accelerating its earnings to recover from the losses, according to its Q3 2024 earnings report. In a bid to restore its balance sheet, MTN Nigeria recently raised an additional ₦42.20 billion through commercial paper issuance.

In contrast, rival Airtel Africa's stock remained stable, underscoring the limited impact of the Nigerian tariff adjustment on the company's overall valuation. Airtel Africa's share price closed at ₦2,159 on Tuesday. This is likely due to the fact that Airtel Africa's listing covers its entire African business portfolio, making the Nigerian tariff hike less significant to its overall valuation.

MTN Nigeria's profits have been plummeting since 2023, primarily due to a naira devaluation and quickening inflation. The telco giant reported a loss after tax of ₦514.9 billion in the first nine months of 2024, a 59.2% decline compared to the previous year. However, the approved tariff hike is expected to provide a much-needed boost to the company's profitability.

According to Karl Toriola, MTN Nigeria CEO, "In the first nine months of 2024, we sustained the growth in our underlying operating performance – underpinned by our resilient business model and operational agility – despite challenging conditions." This statement suggests that the company is confident in its ability to navigate the current economic landscape and return to profitability.

The road to recovery for MTN Nigeria is still underway, but the approved tariff hike is a significant step in the right direction. As the company continues to implement its strategies to restore its balance sheet, investors will be closely watching its progress. With the Nigerian telecom market being a significant contributor to MTN Nigeria's revenue, the approved tariff hike is expected to have a positive impact on the company's financial performance in the coming quarters.

In conclusion, MTN Nigeria's share price surge following the approval of the telecom tariff hike is a clear indication of investor confidence in the company's ability to return to profitability. As the company continues to navigate the challenges of the Nigerian market, its ability to adapt and innovate will be crucial to its long-term success.