Home FeatureMedia MTN Nigeria seeks N23b short-term debt capital

MTN Nigeria seeks N23b short-term debt capital

by Goddie Ofose
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MTN Nigeria Communications (MTN Nigeria) Plc yesterday opened application list to raise about N23 billion in new short-term debt capital through the issuance of commercial papers.

MTN Nigeria is offering 184-day series three commercial  papers (CPs) with discount rate of 10.42 per cent and implied yield of 11 per cent. The issuance is under the company’s N150 billion CP programme.

Minimum subscription to the offer is N5 million and thereafter in multiples of N1 million. Application list closes on September 12.

The CP issuance comes ahead of the ongoing arrangements by MTN Nigeria to raise about N200 billion under a new capital raising programme.

The Nation had reported that MTN Nigeria plans to issue two tranches of bonds ranging from four to 10 year tenors to raise new funds to partly finance its expansionary drives and further deepen its balance sheet for stable growth.

While the opening date for the new bond issue is yet to be decided, sources in the know said the new capital raising would be undertaken through the book-building method, an auction-like, bid-based process that usually targets investment firms and high networth investors.

MTN Nigeria will use the net proceeds of the new bond issue to support its capital expenditure, working capital and other corporate purposes.

Under the arrangements, MTN Nigeria will offer a tranche of four-year bonds and another tranche of 10-year bonds; all as fixed rate senior unsecured bonds under its new N200 billion bond issuance programme.

The bond will be offered at a par value of N1000 with minimum subscription of 10000 or N10 million.The new bonds are expected to be listed on the FMDQ Securities Exchange Limited after the completion of the issuance.

Market analysts said they expected the offer to be fully subscribed citing MTN Nigeria’s industry position and rating. The telecommunication group is rated AAA by Global Credit Rating )GCR) and Aa+ by Agusto & Co. Limited, underlining its strong financial position.

MTN Nigeria has been active in the domestic capital market this year; leveraging its strong market position to access funds. It had in May 2022 successfully raised N127 billion new debt capital, placing it in better position to diversify its capital funding.

MTN Nigeria had in My 2022 issued two commercial papers worth N127 billion. The two issuances were under its N150 billion commercial paper (CP) issuance programme. The net proceeds of the CPs were used by MTN Nigeria to support its short-term working capital and funding requirements.

MTN Nigeria is one of Africa’s largest providers of communications services and Nigeria’s premier provider of connectivity, communication and collaboration solutions. MTN Nigeria is a member of MTN Group – a multinational telecommunications group, which operates in 21 countries in Africa and the Middle East. The company serves over 77 million subscribers with national coverage and a fibre network that reaches every state in the nation.

Latest audited report of MTN Nigeria showed mobile subscribers of 68.5 million, with active data users of 34.3 million and active fintech subscribers of 9.4 million.

Key extracts of the audited report and accounts of MTN Nigeria for the year ended December 31, 2021 showed that gross revenue increased by 23.3 per cent to N1.7 trillion. Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 27.9 per cent to N877.1 billion with EBITDA margin increasing by 2.1 percentage points to 53.0 per cent. Profit after tax rose by 45.5 per cent to N298.7 billion, implying earnings per share of N14.67.

Half-year results for 2022 showed profit after tax of N181.63 billion; representing 28.06 per cent growth in net profit. Total assets stood at N2.53 trillion; an increase of 16.44 per cent. Recent reports estimated that MTN Nigeria has 74.1 million mobile subscribers and 36.8 million active data users.

Market analysts said MTN Nigeria was well positioned for long-term sustainable growth due to its infrastructure investments; including the impending deployment of 5G technology due to commence this quarter. It already has 90.01 per cent 2G population coverage, 82.63 per cent 3G population coverage, and 70.75 per cent 4G population coverage.

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