MTN Nigeria proposes new dividend plan for shareholders

Mobile telecommunication giant, MTN Nigeria, has proposed a new dividend plan to its shareholders.

In the new arrangement, the company is expected to substitute shares for cash during dividend payout.

In a document sent to the Nigerian Exchange Limited (NGX) on Friday, MTN Nigeria urged its shareholders to vote for a scrip dividend plan at their Annual General Meeting slated to hold on April 18.

The firm revealed that the scrip dividend plan would benefit the shareholders as their dividends paid in shares would be reinvested in the company.

The scrip dividend will also help MTN Nigeria to retain more cash which in turn will be disbursed to finance its working capital.

READ ALSO: MTN Nigeria raises N125bn credit via commercial paper

The document read: “Directors have proposed for shareholders’ approval at the AGM, a scrip dividend plan that would give interested shareholders the option to elect and receive new ordinary shares in the Company instead of receiving the dividend in cash (“Scrip Dividend Election Plan”).

“It will also benefit the Company as the cash, which would otherwise be paid out in dividends, will be retained for working capital and other general corporate purposes.”

Ripples Nigeria understands that the shares for dividends payment will reduce MTN’s dependence on borrowing from the capital market and consequently increase its liquidity to do business.

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