In a communication to the Nigerian Exchange Limited and the investment community, the telecommunications leader indicated that the issuance of Series 11 and 12 CPs is intended to enhance its short-term working capital. As MTN Nigeria looks to engage with the debt market, this initiative also aims to diversify its financial resources.
Additionally, MTN Nigeria’s financial report from September 2024 reveals a working capital deficit of N1.49 trillion. The anticipated funds are expected to bolster the company’s operational capabilities and growth trajectory. They will also facilitate infrastructure development and enhance service delivery, digital offerings, and overall telecommunications demands.
Over the past year, MTN Nigeria has progressively expanded its series of CP issuances, establishing a solid strategy to optimize its capital structure. In December 2023, the company successfully raised N72.1 billion through CP issuance, followed by N52.9 billion in November 2023. These funds were allocated to meet working capital requirements.
Both issuances were directed towards similar operational needs, reflecting MTN Nigeria’s approach to utilizing the debt market to maintain liquidity and manage its significant loan commitments.
By securing further funding through the Series 11 and 12 CPs, MTN Nigeria aims to fulfill its immediate working capital requirements while also reducing some of its short-term loan pressures.
MTN Nigeria currently holds an external loan portfolio totaling approximately N1 trillion, with N522.3 billion allocated to short-term loans. The company's Commercial Paper (CP) Programme, valued at N250 billion, permits the issuance of multiple CP series as needed.
This initiative is crucial as it allows MTN Nigeria to manage its short-term obligations and address cash flow requirements with minimal dependence on long-term financing. To enhance financial flexibility, the company can modify its interest expenses and debt management strategies.
In a Nigerian economy facing various financial hurdles, these strategies position MTN Nigeria to better navigate economic challenges. Furthermore, the issuance contributes to diversifying the company's funding sources, decreasing reliance on bank loans, and achieving a balanced approach to short- and long-term debt.
While specific terms for the Series 11 and 12 notes have not yet been disclosed, the company is anticipated to provide further information in the upcoming weeks.