MTN Nigeria’s commercial paper oversubscribed by N25 billion

• MTN Nigeria’s Series 11 and 12 Commercial Paper Issuance was oversubscribed by N25 billion
• The offering is part of the telco’s N250 billion Commercial Paper Issuance Programme
• MTN Nigeria hopes to leverage the debt market to broaden its funding sources

MTN Nigeria Communications Plc’s Series 11 and 12 Commercial Paper (CP) issuance of N50 billion was oversubscribed by over N25 billion to reach a total of N75,183,859,000.

MTN Nigeria notified the Nigerian Exchange (NGX) and the investing public of the completion of its Commercial Paper Issuance in a filing on the NGX disclosure platform and signed by the company’s secretary, Uto Ukpanah.

The company said the offering is part of its N250 billion Commercial Paper Issuance Programme, which targeted N50 billion but recorded a 150 per cent subscription, bringing the final issuance to N75.18 billion.

The telco noted that the Commercial Paper issuance was well-timed, given the prevailing macroeconomic conditions in the country.

It said, “We sought to raise N50 billion in the issuance, however, the offer recorded a 150 per cent subscription with N75.18 billion issued. The 181-day and 265-day CP were issued at yields of 27.50 per cent and 29.00 per cent, respectively, with an issue date of November 7, 2024.

“The 265-day Series 12 CP was priced broadly at par with the 364-day Nigeria Treasury Bill instrument, which closed at a yield of 29.84 per cent during the auction held on November 6, 2024.

“This represents a well-timed transaction for the company, as interest rates are expected to rise further following the outcome of the auction as monetary policy authorities continue to address interest and exchange rate pressures.”   

CP issuance aims to broaden MTN Nigeria’s funding sources

MTN Nigeria issued two Commercial Papers on Thursday, November 7, following which its 181-day paper yielded 27.50 per cent, the 265-day paper provided a higher yield of 29.00 per cent, while the 265-day Series 12 commercial paper was priced competitively.

The yields follow in the steps of the 364-day Nigerian Treasury Bill, which closed at a yield of 29.84 per cent during an auction held on November 6.

The yield is 384 basis points higher than the closing yield recorded at the preceding auction two weeks ago, which reflects an upward adjustment in the market’s interest rate environment.

The telco said the latest issuance is to bolster the company’s short-term working capital and broaden its funding sources. This is part of the company’s ongoing strategy to leverage the debt market for flexible financial needs while maintaining a balanced capital structure.

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.

MTN Nigeria suffered losses in 9-months 2024

Recall that the telecommunication giant 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, released on Thursday, October 31, 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 CEO Karl Toriola had warned of the company’s imminent shutdown if the telecommunications tariff is not hiked, noting that the company 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.