MTN Nigeria Communications Plc has announced plans to issue up to N50 billion ($30.4 million) in Series-11 and -12 commercial paper notes as part of its N250 billion ($151.9 million) commercial paper issuance programme. This was stated in a corporate notice filed with the Nigerian Exchange Limited on Monday and signed by Uto Ukpanah, the Company Secretary.
This issue follows the success of MTN’s previous Series 10 commercial paper, which raised N72.1 billion ($43.8 million) in late 2023 with a subscription rate of 149%. The Series 10 notes had a period of 266 days and a yield of 16%.
According to MTN’s announcement, the new issuance is part of the company’s overall aim to diversify its financing options, with the funds set aside for short-term working capital requirements. This decision is consistent with MTN’s attempts to maintain liquidity in the face of Nigeria’s difficult economic conditions, which include increased energy costs, naira devaluation, and inflation, all of which have had an impact on business operations.
Despite a 33.6 percent growth in service revenue to N2.4 trillion ($1.46 billion) in the first nine months of 2024, MTN recorded a loss of N1.9 billion ($1.2 million), owing mostly to naira depreciation and rising operational costs. The company’s earnings before interest, tax, depreciation, and amortization (EBITDA) fell 5.3 percent to N860.2 billion ($522.8 million), with a loss after tax of N514.9 billion ($313 million).
MTN Nigeria CEO Karl Toriola welcomed the company’s strong operational performance in a difficult environment, but stated that currency devaluation, rising energy costs, and inflation had a significant impact on the bottom line. He also stated that the implementation of value-added tax (VAT) on leases in 2023 will put extra pressure on EBITDA.
Toriola also stated that if net foreign exchange losses were eliminated, MTN’s after-tax profit would have been N118.5 billion ($72 million), a 59.2 percent decrease year on year. Adjusting for the FX impact on operational expenses, profit after tax would have increased by 13.3% to N367.1 billion ($223.1 million).
Despite these problems, MTN had positive free cash flow of N536.8 billion ($326.3 million), up 21.9%, owing to favorable working capital and decreased capital expenditure. The planned commercial paper issuance is expected to provide MTN with the cash it requires to weather current economic challenges while continuing to invest in its operations.
