MTN Group Ltd to Raise $1.1 Billion in Debt in Nigeria to Fund Local Investment

MTN Group Ltd. is planning on borrowing at least 400 billion naira (over $1.1 billion) in Nigeria this year (2018) so as to fund local investment and replace existing debt in Africa’s most populous country.

Africa’s largest wireless carrier by sales plans to sell bonds and take out long-term loans in Africa’s biggest oil producer, which is barely recovering from a 2016 economic contraction.

“We want to gear up our debt on an operational level away from the holding structure,” said MTN’s Chief Financial Officer, Ralph Mupita. “The debt must be where the Ebidta is and we want to raise as much as possible in local currency.”

This year in March, MTN announced its decision to cut its 2018 dividend from 700 cent to 500 cent as a means of cutting debt, but it plans to use 2018 figures as a base to increase payouts by 10 to 20 per cent in the next three to five years.

The company has been borrowing money over the last five years to fund its investment and dividends payment, MTN Chief Executive Officer Rob Shuter said while announcing the group’s 2017 results.

In 2017, MTN reported a 3.3-billion-rand profit – excluding one-off charges related to a $1.1 billion Nigerian fine – against 1.4-billion-rand loss declared in 2016. The telecommunication firm’s net debt rose to 57 billion rand ($4.5 billion) in 2017 from 52 billion rand the previous year.

MTN plans to shift its focus from dollar-denominated debt to debt in local currencies where it operates, as it looks to list its Nigerian unit on the Lagos stock exchange by the end of 2018, Mupita noted.

Nigeria’s securities regulator is preparing for record bond issuance from companies seeking to benefit from lower interest rates and an economy on the mend.