MTN Nigeria, a leading telecommunications entity, has secured N125 billion (equivalent to $156.25) by issuing its series 6 and 7 commercial paper notes. This strategic action is aimed at diversifying the company’s financing channels. The formal declaration of this move was conveyed by MTN Nigeria’s Company Secretary, Uto Ukpanah, and was shared with the Nigeria Exchange Limited.
The capital raised from this venture will cater to the immediate short-term working capital requirements, showcasing the company’s pragmatic approach to financial resource management.
As highlighted by Nairametrics, parts of the official statement mentioned:
“MTN Nigeria Communications PLC (MTN Nigeria) is pleased to inform the Nigerian Exchange Limited and the investment community about the successful conclusion of its Series 6 & 7 Commercial Paper issuance under its expanded N250 billion Commercial Paper Issuance Programme (the “CP Issuance”).
MTN Nigeria had an initial target of raising N100 billion. Impressively, the offering witnessed a 146% subscription, resulting in N125 billion being issued across both series. This achievement marks the highest collective CP issuance within a single year by any corporate entity in Nigeria’s debt capital markets.”
Delving deeper into commercial paper notes, MTN Nigeria recently introduced commercial paper notes with varying maturity periods. The 181-day commercial paper offers a yield of 13.00%, and the 265-day commercial paper provides a gain of 13.50%. These notes were issued on August 23, 2023.
Karl Toriola, MTN Nigeria’s CEO, shared his perspective on this development, expressing satisfaction with the investor response, highlighted by an impressive 146% subscription rate. This strong response underscores MTN Nigeria’s robust financial health, brand strength, and dominant position in the sector.
Commercial paper is recognized as a money market instrument designed to cater to short-term borrowing needs. Typically, its maturity spans up to 270 days, making it ideal for meeting immediate financial demands. Issuing commercial paper offers organizations an efficient and economical means to obtain funds for a short duration.
In other developments, in May 2023, MTN secured approval from the Nigerian Communication Commission to lease two spectrums from Natcom Development and Investment Limited (NTEL). This lease agreement, valued at N4.25 billion, encompasses taxes, regulatory fees, and other related charges. It will be valid for two years, starting from May 1, 2023, as reported by Nairametrics. This arrangement enables MTN Nigeria to utilize two spectrums (5HMz Frequency Division Duplex and 10HMz FDD) from NTEL, covering 19 Nigerian states. This move is part of MTN’s strategy to maintain its competitive edge in the industry.
Furthermore, MTN Nigeria has proposed a merger of its two financial subsidiaries, Momo Payment Service Bank Limited and Yello Digital Financial Services Limited. The rationale behind this merger proposition is to hold the Payment Service Bank license granted by the Central Bank of Nigeria, enabling the merged entity to offer super-agent services and other permissible activities.
In a statement signed by Ufo Ukpanat, the company’s secretary, MTN Nigeria disclosed its aim to raise N100 billion. The offering was oversubscribed by 125%, amounting to N125 billion, which will be allocated towards short-term working capital and funding needs. The commercial papers included a 188-day CP with a yield of 11.00% and a 267-day commercial paper with a yield of 12.50%.