MTN Nigeria is going ahead to borrow almost N90 billion from the debt market to fund its domestic operations.
The credit will be obtained through bond issuance following regulatory approval. Since the announcement, shareholders investment has been declining, Ripples Nigeria capital market analysis shows.
In a statement released to the investing public, MTN said it is seeking a total of N89.999 billion with a 10-Year Fixed Rate by conducting a series II bond from its N200 Billion Bond Issuance Programme.
“MTN Nigerian Communications Plc (MTN Nigeria) has obtained the approval of the Securities and Exchange Commission to launch the Series II 10-Year Fixed Rate Bond (Series II Bond) announced on 21 September 2021.” the note reads.
The Series II will end the bond programme, which had previously provided the telecommunications company with N110 billion (Series 1) 7-Year 13.0% Fixed Rate Bonds due in 2028, and expected to be paid twice in 2027 and the next year.
The network provider disclosed that the book build (for the series II), which will determine the share value MTN will exchange its stake for investor capital, will be launched by October 8, 2021.
MTN Nigeria said it’s utilising the bond market to diversify its funding sources, with Ripples Nigeria gathering the telco had sourced for funds through local and foreign facility, as well as commercial papers and trade loans.
Investors selling off, shareholders losing money amid bond issuance plan
With it’s new journey into the debt market, MTN Nigeria will be increasing its debt which was put at N578.33 billion as of June 30, 2021. It had risen from N521.15 billion as of December 31, 2020.
Increasing debt have a negative impact on balance sheet, and often weakens revenue generation and investment, which MTN says it maximises external borrowings on. although the network said in its Q2 financials that, “There are no fixed-term borrowings approaching maturity without realistic prospects of renewal or repayment. We are currently complying with all loan agreements and no loans have been renegotiated.”
However, despite the high confidence MTN Nigeria has in its “strong cash generating capacity”, the capital market seems to think differently, as investors have been selling off since the intention to conduct a Series II bond programme was announced in the fourth week of September.
The sell off among investors has caused MTN Nigeria’s market value to drop 3.3 percent, and cost shareholders N2.03 billion in two weeks.
Join the conversation
Support Ripples Nigeria, hold up solutions journalism
Balanced, fearless journalism driven by data comes at huge financial costs.
As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.
If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.
Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.
SPECIAL REPORT: Illegal miners degrade Ekiti community, engage in child labour
The activities of illegal miners in a community in Ekiti State have caused degradation of the environment, as miners engage...
SPECIAL REPORT: Inside the illegal trading of forest woods in Cross River community
“With a N20,000 bribe, an external buyer can influence the youth in host communities , Cross River State, to cut...
SPECIAL REPORT: Enugu govt watches as waste takes over state, threatens public health, environment
In this report, Arinze Chijioke looks at how delays in evacuation of waste in Enugu State encourages indiscriminate waste disposal, its health implications, and how...
INVESTIGATION: NDDC awards N1bn road contract to poultry farm
The Niger Delta Development Commission (NDDC) in what appears a breach of procurement laws, awarded a contract worth N1.028 billion...
FEATURE… Hard job, low income: Agony of Nigerian commercial drivers
Amid increase in fuel price over the years, coupled with bad roads and insecurity in Nigeria, many commercial drivers have...