MTN Nigeria eyes N52bn recapitalisation to finance operations

MTN Nigeria Plc is proposing the issuance of up to N52.896 billion in Series 8 & 9 Commercial Paper under its N250 billion Commercial Paper Programme. This new issuance of N52.896 billion will be split between Series 8 with a size of N30 billion, which will mature in 270 days, and Series 9 with a size of N22.896 billion, which will mature in 182 days.

The proposed issuance was disclosed in a corporate notice filed with the Nigerian Exchange Limited. The notice, signed by Uto Ukpanah, MTN’s company secretary, stated that the issuance is part of the company’s strategy to diversify its financing options and that the funds will be used for short-term working capital and other funding requirements.

According to the telecom giant, its Series 6 & 7 Commercial Paper (CP) Issuance under its N250 billion CP Issuance Programme was successfully completed, with a 146 per cent oversubscription by investors. MTN noted that it sought to raise N100 billion and ended up issuing a total of N125 billion across both series,a strong indicator of investor confidence in its  credit profile and the attractiveness of its CP programme.

Ukpanah noted that the N125 billion issuance is the largest aggregate CP issuance by any corporate within a calendar year in Nigeria’s debt capital markets. The company issued a 181-day CP at a yield of 13 per cent and a 265-day CP at a yield of 13.50 per cent, with an issue date of August 23, 2023. Ukpanah explained that the CP issuance is aligned with MTN Nigeria’s strategy to diversify its funding sources and reduce its average cost of debt.

MTN’s financial results for the first nine months of 2023 showed that the company’s N250 billion commercial paper programme was issued in March and August 2023, with N52 billion redeemed in September 2023. The remaining tranches are scheduled to mature in November 2023 (N72 billion at 12.5%), February 2024 (N52 billion at 13%), and May 2024 (N72 billion at 13.5%).

Despite a 75.7 per cent year-on-year decline in profit before tax to N32.08 billion in Q3 2023, as compared to N132.04 billion in Q3 2022, MTN reported a 21.8 per cent increase in revenue from N1.45 trillion in September 2022 to N1.77 trillion in September 2023. While the decline in profit before tax is a concern, the increase in revenue is a positive sign for the company and reflects the continued strength of its business.

In discussing the company’s investment portfolio, Karl Toriola, CEO of MTN Nigeria, stated that the company is pleased with the support it has received from the investor community, as reflected by the 146% subscription rate. He attributed this success to the company’s robust financial capacity, the strength of its brand, and its leading role in the industry.