MTN Nigeria Plans N52.896 Billion Commercial Paper Offering

MTN Nigeria Plc has unveiled its proposal for issuing series 8 and 9 Commercial Papers (CP) with a total value of up to N52.896 billion. This initiative falls under the company’s broader N250 billion issuance program, and its intentions have been made public in a notification to the Nigerian Exchange Limited, as reported by Infostride News.

Uto Ukpanah, the Company Secretary at MTN Nigeria Communications Plc, officially announced the proposed CP issuance. The primary objective behind this financial move is to diversify the company’s financing options. The raised capital will be allocated for short-term working capital requirements and to fulfill other financing obligations.

In recent times, MTN Nigeria Communications Plc had successfully completed the issuance of its Series 6 and 7 Commercial Papers, which also came under the umbrella of its N250 billion Commercial Paper Issuance Program. Notably, the response from investors was overwhelming, with a remarkable 146% oversubscription.

The telecommunication giant initially aimed to raise N100 billion in the offering but exceeded expectations by issuing N125 billion worth of CP across both series. This resounding success underscores MTN Nigeria’s robust financial position, the strength of its brand, and its prominent role in the industry.

Uto Ukpanah, the Company Secretary of MTN Nigeria Communications, lauded the success of this venture, stating that this offering represents the most substantial aggregate CP issuance within a calendar year by any corporate entity in Nigeria’s debt capital markets. This achievement is a testament to MTN Nigeria’s commitment to diversify its funding sources and reduce its average cost of debt.

The Commercial Papers issued in this round include a 181-day CP with a yield of 13% and a 265-day CP with a yield of 13.50%. These were issued on August 23, 2023. The proceeds generated from this issuance will be allocated towards fulfilling short-term working capital requirements, further aligning with MTN Nigeria’s strategic financial goals.

MTN Nigeria’s Chief Executive Officer, Karl Toriola, expressed his satisfaction with the immense support received from the investor community, resulting in the remarkable 146% subscription rate. This resounding success is a testament to MTN Nigeria’s financial capacity, the strength of its brand, and its position as a leader in the industry.

This financial move comes in the wake of MTN Nigeria Communications Plc reporting a year-on-year decline in its profit before tax, marking a decrease of 75.7%. In Q3 2023, the company reported a profit before tax of N32.08 billion, in contrast to N132.04 billion recorded during the same period in 2022.

However, it’s worth noting that despite the decline in profit before tax, the company achieved a 21.4% year-on-year increase in revenue, reporting a total revenue of N614.2 billion for Q3 2023. This strong revenue performance helped raise the group’s nine-month revenue to N1.78 trillion, marking a substantial year-on-year increase of 21.76% compared to the corresponding quarter in 2022.

In summary, MTN Nigeria’s proposal to issue series 8 and 9 Commercial Papers demonstrates the company’s commitment to diversifying its financing options and strengthening its financial position. The remarkable success of its recent CP issuance underscores its robust financial capacity and position as a leading player in the industry, despite a decline in profit before tax. The company’s ability to increase its revenue highlights its resilience and strategic approach to financial management.