MTN Nigeria secures N200bn loan from local banks for expansion

MTN Nigeria has secured a N200 billion ($553.5 million) loan from 12 Nigerian banks. The loan, which the company will pay back over the next seven years (including a 2-year moratorium), will be used to fund its capital expenditure (CAPEX), working capital and new business opportunities as they unfold.

The facility is denominated in the local currency, the naira.

The banks that provided the loan are: Citibank Nigeria, Diamond Bank, Ecobank, Fidelity Bank Plc, and First Bank Plc. Others include: FCMB, FSDH Merchant Bank, Rand Merchant Bank, Standard Chartered Bank, Stanbic IBTC, UBA and Union Bank.

The loan would also help MTN to provide optimum services and products for its over 55 million customers. The agreement was formally signed at the law office of Aluko & Oyebode in Ikoyi, Lagos.

The telco seeks to expand its services in the Nigerian market, 41 percent of which it already controls, and grow data revenues

Speaking at the signing, Ferdi Moolman, chief executive officer, MTN Nigeria, said completion of the agreement signposts confidence in MTN’s commitment to Nigeria and the strength of the strategic collaboration between MTN Nigeria and local financial institutions in deepening the provision of ICT services in Nigeria.

“The signing of this loan facility is a major landmark in our expansion programme in which we are making significant investments. The facility will enable us evolve the network to deliver convergent and superior quality, drive voice capacity expansion and data service penetration, maintain optimal capital structure and funding level that support growth and expansion,” he said.

He lauded the participating financial institutions for staying committed to MTN, adding that the loan has proven the strength of the Nigerian financial institutions and their confidence in MTN’s visions, as well as both parties’ joint ability to stimulate significant economic growth.

Pascal Dozie, chairman, MTN Nigeria, also appreciated the banks for confidence in MTN, despite pressures they (the banks) face in terms of credit.

Dozie who was represented by Akin Oyebode, stated that MTN couldn’t have easily managed operations the way it had for the past 17 years of operating in Nigeria, but for the support of the banks.

Rob Shuter chief executive of MTN Group had in April told Bloomberg that plan to list on the Nigeria Stock Exchange (NSE) was progressing and could happen before the end of the year.

The company had disclosed plans to list on NSE following talks with regulators over a $1 billion fine imposed in 2015. The company was slammed with the fine after if failed to disconnect unregistered subscribers, who Nigeria saw as a security risk.

MTN reportedly plans to raise not less than $500 million from the sale of shares, and could sell as much as 30 percent of its Lagos subsidiary.

The deal puts an initial public offering (IPO) believed to have been scheduled for August in doubt. Recall that Nigerian newspaper Daily Trust had last month reported that the IPO may not hold in August. The Abuja-based newspaper, which cited a management source at the Security and Exchange Commission (SEC) noted that MTN had not filled the necessary papers.

A planned Ghana IPO, which Shuter also spoke about in April is ongoing according to the calendar in a prospectus released few months ago. According to the calendar, share allotment ends today, with listing scheduled for September 5.

MTN has till May 2019 to list in Nigeria as agreed with the Nigerian Communications Commission (NCC). The Nigeria subsidiary reported a profit after tax of N80.51 billion ($222.7 million) in 2017, with early signs showing a better 2018. The company reported a Q1 2018 PAT of N32.2 billion after it grew naira service revenue by 14.5 percent to N248.3 billion and data revenue by 73.2 percent year-on-year.