MTN Nigeria Communications PLC recently announced its plan to raise ₦50 billion through its Series 11 and 12 commercial paper (CP) issuance under its ₦250 billion Commercial Paper Issuance Programme. This initiative aims to strengthen MTN’s short-term working capital and diversify its funding sources, as disclosed in a notification to the Nigerian Exchange Limited.
The issuance reflects MTN’s ongoing strategy to utilize the debt market for flexible funding to meet immediate financial needs. The company has used a series of CP issuances in recent years to balance its capital structure effectively. The funds raised through this issuance will support MTN’s operational and growth needs, enabling expansion in infrastructure, enhanced service delivery, and meeting Nigeria’s increasing demand for telecommunications and digital services.
As of September 2024, MTN Nigeria’s financial statement shows a negative working capital of approximately ₦1.49 trillion. This large commercial paper issuance allows MTN Nigeria to tap into multiple CP series as needed, helping manage cash flow demands and service short-term debt without over-relying on long-term financing. This approach grants the company financial flexibility, allowing it to manage interest costs and adjust its debt profile, essential for a company handling substantial external loans.
The Series 11 and 12 notes’ specific terms have yet to be disclosed, but further details are anticipated soon. Leveraging CP enables MTN to address short-term loan obligations effectively, as its external loan portfolio is around ₦1 trillion, with ₦522.3 billion as short-term debt. By frequently issuing CPs, MTN aims to meet working capital needs and alleviate its short-term debt load.
In December 2023, MTN raised ₦72.1 billion through CP issuance, followed by ₦52.9 billion in November 2023, both directed towards working capital, reflecting MTN’s strategy of maintaining liquidity through debt markets. This approach allows MTN Nigeria to support its large loan obligations while diversifying its funding sources.
