MTN Nigeria raises N125 billion through commercial paper notes to increase its working capital.
MTN Nigeria, a leading telecommunications company, has successfully generated N125 billion ($156.25 million) by issuing series 6 and 7 commercial paper notes. This strategic move aims to diversify the company's financing sources and enhance its financial flexibility. The official announcement was made by MTN Nigeria’s Company Secretary, Uto Ukpanah, and it was shared with the Nigeria Exchange Limited.
The proceeds from this initiative will be utilized to address immediate short-term working capital needs, showcasing the company's pragmatic approach to managing its financial resources.MTN Nigeria Communications PLC successfully concluded its N250 billion Commercial Paper Issuance Programme, achieving a 146% subscription and N125 billion issued across both series. This marks the highest aggregate CP issuance in Nigeria's debt capital markets. MTN Nigeria recently issued commercial paper notes with varying maturities, with 181-day and 265-day yields.
MTN Nigeria CEO Karl Toriola acknowledged investors' delight with the company's 146% subscriber rate, underscoring the company's strong financial condition and brand. Commercial paper, a money market asset, has a maturity of 270 days and is ideal for short-term borrowing needs. In May 2023, MTN obtained the approval of the Nigerian Communication Commission to lease two spectrums from Natcom Development and Investment Limited (NTEL).
The telecommunications giant also renewed its 3G license in the country for another 15 years. The lease agreement, valued at N4.25 billion, covers taxes, regulatory fees, and associated charges and is valid for two years starting from May 1st, 2023. This transaction enables MTN Nigeria to utilize two spectrums (5HMz Frequency Division Duplex and 10HMz FDD) from NTEL, encompassing 19 Nigerian states, as part of its efforts to maintain a competitive edge in the industry.
MTN Nigeria also proposed the consolidation of its two finance subsidiaries, Momo Payment Service Bank Limited and Yello Digital Financial Services Limited. This proposition was revealed in a document titled “Explanatory Notes To The Resolutions To Be Proposed At The 2023 Annual General Meeting (AGM).” Hinting at the rationale behind this proposal, the company explained that the merged entity would "retain the Payment Service Bank license granted by the Central Bank of Nigeria and will also be capable of performing super-agent services and other permissible activities."
In a statement signed by Ufo Ukpanat, the company’s secretary, MTN Nigeria aimed to raise N100 billion, and the transaction was oversubscribed by 125%, amounting to N125 billion. This surplus funding will enable the company to allocate the resources toward short-term working capital and funding requirements. The commercial papers comprised a 188-day CP at a yield of 11.00% and a 267-day commercial paper at a yield of 12.50%.
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