MTN Nigeria to Launch N50bn Commercial Paper Despite Economic Pressures
MTN Nigeria Communications Plc has announced plans to issue up to N50 billion in commercial paper notes as part of its N250 billion commercial paper programme, bolstering its working capital amidst a challenging financial environment. The planned issuance of Series 11 and 12 was disclosed in a corporate filing to the Nigerian Exchange Limited on Monday by Company Secretary Uto Ukpanah, and comes as MTN Nigeria navigates significant economic pressures.
In late 2023, the company successfully raised N72.1 billion from its Series 10 issuance, attracting 149 percent oversubscription and yielding a 266-day note at 16 percent. This latest issuance underscores MTN’s strategy to diversify its financing channels and address immediate operational costs.
The announcement follows MTN Nigeria’s recent financial disclosures, which revealed a N1.9 billion net loss in the first nine months of 2024, attributed largely to the naira’s persistent depreciation, rising energy costs, and inflationary pressures. Chief Executive Karl Toriola explained that while the company’s underlying performance remained robust—with service revenue rising 33.6 percent to N2.4 trillion—these gains were overshadowed by macroeconomic headwinds.
“Despite our topline growth, EBITDA remains under significant pressure due to ongoing naira depreciation and rising operational costs,” Toriola commented in a statement filed with the Nigerian Exchange Limited. He noted that the revaluation of foreign currency obligations had heavily impacted the company’s bottom line, translating into a N514.9 billion after-tax loss for the first three quarters, alongside negative retained earnings and shareholders’ equity.
The additional burden of a recently introduced VAT on leases in 2023 has further constrained year-over-year EBITDA performance, a point Toriola highlighted as one of many headwinds the company faces in its bid to stabilize earnings.
To improve MTN Nigeria’s capital position, Toriola outlined five key measures, including potential tariff hikes and efforts to reduce exposure to foreign currency obligations. Despite the reported losses, MTN Nigeria achieved a 21.9 percent increase in free cash flow to N536.8 billion, bolstered by prudent working capital management and reduced capital expenditure over the period.
As MTN Nigeria embarks on this fresh debt issuance, the company reaffirms its commitment to sustaining operational agility. The forthcoming commercial paper issuance, in particular, highlights MTN’s proactive approach in leveraging diverse financing options to weather the prevailing economic challenges facing Nigeria’s telecommunications sector.
