MTN Nigeria, the largest Mobile Network Operator (MNO) in the country, has unveiled plans to source N50 billion in Series 11 and 12 commercial paper notes under the company’s N250 billion commercial paper issuance programme.
In a Note signed on Monday by the Company Secretary, Barr. Uto Ukpanah, to the Nigerian Exchange Limited (NGX), the management indicated that “the issuance is part of the company’s strategy to diversify its funding sources”, and expressed the hope of using the fund to bridge its working capital gap in the short term.
The planned issuance of the commercial paper for the first time by the telco this year is coming after it explored the debt market four times last year to raise N375 billion.
In November last year, MTN raised N72.1 billion in the series 10 commercial paper issuance under the N250 billion commercial paper issuance programme, recording a 149% subscription rate, and at a yield of 16%.
The latest financial reports on the largest MNO in the country showed that its move to issue the CP may be desirable for its balance sheets in the medium term after it reported a N1.9 billion loss in the first nine months of 2024, attributing it to the continuous devaluation of the naira, rising energy costs, and the prevailing inflationary environment.
For instance, the telco’s shareholder funds stood at -N573.6 billion at the end of the third quarter, up from -N40.8 billion a year earlier.
The MTN Nigeria Chief Executive Officer, Karl Toriola, in comments on the company’s quarterly results filed with the Nigerian Exchange Limited on Thursday, stated that the telco would be considering a mix of measures to improve its negative capital position.
He listed the measures as including regulated tariff increases, optimisation of capital expenditure, reduction of US dollar exposure and review of tower lease contracts.
On the financial report, Toriola clarified: “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.
“The further depreciation of the naira arising from the revaluation of foreign currency-denominated obligations resulted in a loss after tax for the nine months of N514.9bn (2023: 15.0bn loss, restated). This resulted in negative retained earnings and shareholders’ equity of N723bn (December 2023: negative N208bn) and N573.6bn (December 2023: negative N40.8bn), respectively.
“Adjusting for the net forex losses, PAT would have been positive N118.5bn (down by 59.2 per cent). Further adjusting for the impact of forex in our opex, PAT would have been up by 13.3 per cent to N367.1bn. Despite the reported losses, we delivered a positive free cash flow of N536.8bn, up 21.9 per cent, helped by favourable working capital movements and lower capex in the period”, he added.
