MTN Nigeria raises N125bn via commercial paper notes to boost its working capital

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MTN Nigeria, a prominent telecommunications company, has successfully generated N125 billion ($156.25) through the issuance of series 6 and 7 commercial paper notes. This move serves as a strategic step to expand the company’s avenues for financing. The official announcement was made by MTN Nigeria’s Company Secretary, Uto Ukpanah, and was shared with the Nigeria Exchange Limited.

The funds acquired from this initiative will be directed toward addressing immediate short-term working capital needs, which reflects the company’s practical approach to managing its financial resources.

As seen by Nairametrics, some parts of the statement read:

“MTN Nigeria Communications PLC (MTN Nigeria) hereby notifies Nigerian Exchange Limited and the investing public of the successful completion of its Series 6 & 7 Commercial Paper issuance under its upsized N250 billion Commercial Paper Issuance Programme (the “CP Issuance”).  

MTN Nigeria sought to raise N100 billion, and the offer recorded 146% subscription with N125 billion issued across both series. This represents the largest aggregate CP issuance within a calendar year by any corporation in Nigeria’s debt capital markets.” 

Read More: MTN Nigeria raises N125b in series 4 & 5 of its Commercial Paper issuance program

More on commercial paper notes

MTN Nigeria recently released commercial paper notes with different maturities. The 181-day commercial paper comes with a yield of 13.00%, while the 265-day commercial paper carries a yield of 13.50%. These notes were issued on August 23, 2023.

Karl Toriola, the CEO of MTN Nigeria, expressed his thoughts on this development by stating that MTN Nigeria is satisfied with the response from investors, noting a remarkable 146% subscription rate. This notable reception underscores the company’s solid financial position, the strength of its brand, and its prominent standing within the industry.

MTN Nigeria raises N125bn via commercial paper notes

Speaking about Commercial paper, it is characterized as a money market instrument.

Commercial paper is designed for short-term borrowing needs. It typically has a maturity period ranging up to 270 days, making it well-suited for addressing immediate financial requirements. The issuance of commercial paper provides these entities with a convenient and cost-effective way to secure funds for a limited period.

MTN in Nigeria

In May 2023, MTN secured the Nigerian Communication Commission’s consent to rent two spectrums from Natcom Development and Investment Limited (NTEL). The telco giant has also renewed its 3G license in the country for another 15 years.

The lease deal worth N4.25 billion covers taxes, regulatory fees, and auxiliary charges and is valid for two years from May 1st, 2023, Nairametrics reports. The telecommunication giant also hopes this will boost its goal of optimizing coverage for all subscribers.

This transaction allows MTN Nigeria to use two spectrums (5HMz Frequency Division Duplex and 10HMz FDD) from NTEL, which cover 19 Nigerian states, as part of efforts to remain ahead of the competition in the industry.

MTN Nigeria

MTN Nigeria also proposed merging its two finance subsidiaries, Momo Payment Service Bank Limited and Yello Digital Financial Services Limited. The telecommunications firm revealed this in a document labelled “Explanatory Notes To The Resolutions To Be Proposed At The 2023 Annual General Meeting (AGM).”

Giving a clue to the drive behind this proposition, the company explained that the proposed merger would “hold 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, the telecommunication giant revealed that it sought to raise N100 billion, and the transaction was 125 per cent oversubscribed to the tune of N125 billion to enable the company to disburse the fund on short-term working capital and funding requirements.

The commercial papers included a 188-day CP at a yield of 11.00 per cent and 267-day commercial paper at a yield of 12.50 per cent.

Read More: MTN Nigeria proposes a merger of MoMo PSB, Yello Digital Finance Services to form one ‘super’ finance platform


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