MTN Nigeria issues another commercial paper after 150% oversubscription of previous offer

• MTN Nigeria has issued its Series 13 and 14 commercial paper worth N50 billion
• The new issuance follows the 150 per cent oversubscription of its previous offer
• MTN Nigeria hopes to diversify its funding sources through the issuance following revenue losses this year

Following the 150 per cent oversubscription of its previous offer, MTN Nigeria Communications Plc has announced the issuance of its Series 13 and 14 commercial paper issuances, worth up to N50 billion.

This was contained in a disclosure to the Nigerian Exchange (NGX) signed by MTN Nigeria’s company secretary, Uto Ukpanah.

Recall that the telecommunications giant successfully completed its Series 11 and 12 commercial paper offers recently, raising N75.18 billion, which was N25.18 billion higher than the N50 billion it initially targeted.

The Series 13 and 14 commercial paper offering is part of the telco’s N250 billion Commercial Paper Issuance Programme.

CP issuance aims to diversify telco’s funding sources

The commercial paper route, the first of which was issued on November 7, is part of MTN Nigeria’s effort to broaden its funding sources, as it plans to allocate proceeds from the new issuance to strengthen short-term working capital and support its financial plans.

It said funds from this issuance will be channelled towards improving operational efficiency and growth initiatives, particularly on expanding infrastructure, improving service delivery and addressing the rising demand for telecommunications and digital services nationwide.

The company hopes that this approach will be effective in strengthening its liquidity position and address changing market conditions.

MTN Nigeria’s stocks and finances suffered a decline

The stocks of MTN Nigeria suffered declines in 2024 after maintaining a moderate long-term sentiment.

The company’s stocks opened the year’s trading at N264 with a total market volume of 52 million shares recorded for the month. However, the stocks suffered a decline within the year, reaching N170 as of the market opening on November 27, 2024.

Factors such as foreign exchange-related pressures have affected the telecommunications sector, increasing operational costs and probably dampening investor sentiment.

The telecommunication giant also lost N514.9 billion after tax in the nine months of 2024 to naira depreciation, which increased its foreign currency-denominated obligations.

According to its unaudited results for the nine months ended September 30, 2024, the company suffered a 3,335 per cent loss from the N15.0 billion loss recorded in the same period of 2023.

The loss consequently impacted the company’s retained earnings and shareholders’ equity, which amounted to N723.0 billion and N573.6 billion, respectively, as of September 2024.

The telco’s subscriber base also declined by 0.9 per cent to 77.0 million within the nine months. The decline is attributed to the recent National Identity Number (NIN)-SIM card verification exercise mandated by the Federal Government, which led to the deactivation of 64.3 million lines not linked to NIN.

There are indications that the telco may hike tariffs to mitigate the impact of losses occasioned by the continued depreciation of the naira.

Recall that MTN Nigeria’s CEO, Karl Toriola, had warned of the company’s imminent shutdown if the telecommunications tariff is not hiked, noting that the company, despite its seven per cent contribution to Nigeria’s Gross Domestic Product (GDP), now operates on its reserves, which is not sustainable over time.

According to the 2023 Sustainability Report, MTN still relies on profits accrued over the last two decades, with a corporate social investment of N2.6 billion.

In the first quarter of 2024, MTN Nigeria recorded a N519.1 billion loss due to naira depreciation and a high inflation rate.

The situation is similar to the experience of other telcos that have recorded losses due to the naira devaluation.

MTN introduces recyclable SIM cards to promote sustainability in Nigeria

Meanwhile, TheRadar reported that MTN Nigeria announced the introduction of paper-based, biodegradable, eco-friendly SIM cards in line with its Project Zero goals to reduce greenhouse gas (GHG) emissions and achieve net zero emissions by 2040.

According to the company, the biodegradable paper-based SIM card is safer for the environment, as it supports the management of products throughout their lifecycle in a manner that promotes circularity and reduces waste.