MTN Nigeria Communications PLC has announced the successful completion of its Series 13 and 14 Commercial Paper (CP) issuances, raising a total of N72.18 billion.
This milestone was disclosed in a formal notification to shareholders and the Nigerian Exchange (NGX), marking a significant achievement in the company’s N250 billion Commercial Paper Issuance Programme.
The Series 13 and 14 issuance, conducted on November 29, 2024, initially targeted N50 billion but was oversubscribed by an impressive 144%, culminating in a final issuance of N72.18 billion. This oversubscription highlights sustained investor confidence in MTN Nigeria’s financial stability, market leadership, and resilience despite the challenges facing the telecommunications sector and the broader economy.
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A Closer Look at the Issuance
The commercial papers offered competitive yields of 27.50% for the 181-day paper and 29.00% for the 265-day paper. These attractive yields appealed to a diverse range of investors, demonstrating a strong appetite for MTN Nigeria’s debt instruments.
The issuance was arranged by Stanbic IBTC, acting as the Lead Arranger and Dealer, with additional support from other key financial institutions, including CardinalStone, Chapel Hill Denham, Cordros, Coronation, FCMB, Meristem, Quantum Zenith, and Rand Merchant Bank, all serving as Joint Dealers.
Commenting on the success of the issuance, Karl Toriola, MTN Nigeria’s Chief Executive Officer, expressed gratitude for the overwhelming support from investors.
“We are pleased with the support received from the investor community, having recorded 144% subscription with participation from a broad range of investors,” Toriola stated.
He highlighted that the oversubscription demonstrates the trust investors have in MTN Nigeria’s financial health, operational strategy, and dominant position in the market. He also noted that achieving this milestone amidst challenging macroeconomic conditions underscores the resilience of MTN Nigeria’s business model and its appeal as a reliable issuer in Nigeria’s debt capital market.
The success of MTN Nigeria’s commercial paper issuance also points to broader confidence in Nigeria’s telecommunications sector. Although the industry is one of the hardest hit by Nigeria’s persistent economic headwinds, investors remain optimistic about its long-term prospects. Analysts believe the oversubscription is a clear indication that the telecom industry still commands investor trust as a vital part of Nigeria’s economy.
The Nigerian telecom sector has been bedeviled by the country’s economic headwinds, posing challenges to its growth. These challenges include the scarcity of foreign exchange and the sharp depreciation of the naira. There is also the rising costs of operations due to inflation, which has added financial pressure on telecom companies, forcing them to absorb higher expenses.
Despite these challenges, the Nigerian Communications Commission (NCC) has resisted calls from operators for a tariff increase. This has restricted the ability of telecom companies to pass on rising costs to consumers, further squeezing profit margins.
Significance of the Capital Raise
The proceeds from the issuance will be directed toward critical infrastructure expansion, enhancing service delivery, and meeting the rapidly growing demand for telecommunications services across Nigeria.
These efforts are part of MTN Nigeria’s broader strategy to maintain its leadership position in the market by improving network quality, expanding coverage, and introducing innovative services.
This latest achievement builds on the success of MTN Nigeria’s Series 11 and 12 Commercial Papers, which were completed on November 7, 2024. Those issuances raised N75.1 billion, surpassing the initial target by 150%. Together, these results highlight the effectiveness of MTN’s N250 billion Commercial Paper Issuance Programme in addressing the company’s funding needs while reinforcing investor confidence in its growth trajectory.
Nigeria’s telecommunications sector remains a cornerstone of the economy, contributing significantly to GDP and driving digital transformation across various industries.
However, investor confidence in companies like MTN Nigeria indicates a strong belief in the sector’s ability to weather these challenges and continue delivering value. This confidence is likely tied to the sector’s critical role in providing essential services and enabling economic activities in Nigeria.