MTN Nigeria to Raise N50 Billion Through Latest Commercial Paper Issuance
MTN Nigeria Communications PLC (MTN Nigeria) has announced plans to raise N50 billion through the issuance of Series 11 and 12 Commercial Paper (CP) under its N250 billion Commercial Paper Issuance Programme. This move aims to bolster the company’s short-term working capital and diversify its financing sources, as disclosed in a notification to the Nigerian Exchange Limited and the public.
The new CP issuance is part of MTN Nigeria’s ongoing strategy to leverage the debt market as a flexible funding source to meet immediate financial needs. It builds on the company’s previous CP issuances and reflects its commitment to balancing its capital structure.
Supporting MTN Nigeria’s Growth and Operations
The funds raised from this issuance will support MTN Nigeria’s operations, infrastructure expansion, and service improvements to meet the growing demand for telecommunications and digital services across Nigeria. With the Nigerian telecommunications sector seeing rapid growth, MTN is keen to enhance its infrastructure and provide better service delivery to its expanding customer base.
As of September 2024, MTN Nigeria’s financial statements show it is operating with negative working capital of N1.49 trillion, highlighting the importance of raising funds to meet its financial obligations and continue growing its business.
Why MTN is Raising Funds via Commercial Paper
MTN Nigeria’s N250 billion CP programme allows it to issue multiple series of commercial paper when needed, providing a flexible way to meet its short-term cash flow needs and manage debt repayment. This strategy helps the company manage its interest costs and adjust its debt profile in line with operational cash flow.
By issuing commercial paper, MTN Nigeria can avoid over-reliance on long-term financing and reduce its dependence on bank loans. The CP programme allows the company to maintain a healthy balance between short- and long-term debt, enhancing its liquidity and enabling it to better navigate Nigeria’s volatile economic environment.
While the company has not yet disclosed the specific terms of the Series 11 and 12 notes, further details are expected to be shared in the coming weeks.
Addressing Short-Term Loan Obligations
MTN Nigeria currently holds a total external loan portfolio of N1 trillion, including N522.3 billion in short-term loans. The company’s frequent commercial paper issuances reflect a targeted approach to managing these short-term liabilities.
In December 2023, MTN Nigeria raised N72.1 billion through a CP issuance, followed by N52.9 billion raised in November 2023. These funds were directed toward similar working capital needs, demonstrating the company’s strategy of utilizing the debt market to ensure liquidity and meet its financial obligations.
By raising additional funds through the Series 11 and 12 CPs, MTN Nigeria aims to address its immediate working capital requirements and reduce its short-term loan burden.
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