MTN Nigeria, Africa’s largest wireless operator’s subsidiary, announced plans to raise N50 billion through commercial paper issuance, marking its first debt market venture since November 2023’s N72.1 billion fundraising.
In a statement to the Nigerian Exchange on Monday, the company explained:
“The issuance is part of the Company’s strategy to diversify its funding sources.”
The Explainer learned the funds are intended to address short-term working capital needs.
The latest fundraising effort comes amid significant financial challenges for the telecommunications giant.
Financial records reveal that MTN Nigeria’s current liabilities exceeded its current assets by N1.5 trillion (240%) as of September 2024, indicating severe liquidity pressure.
This financial strain reflects a broader crisis that emerged at the end of the previous financial year, when the company’s balance sheet deteriorated significantly.
Shareholder funds plummeted to -N573.6 billion by the third quarter, a dramatic decline from -N40.8 billion in the previous year.
The company’s debt market activity has notably decreased compared to 2023, when it conducted four separate fundraising rounds totaling N375 billion.
To address its negative capital position, MTN outlined several strategic measures in its recent earnings release, including:
Implementation of regulated tariff increases, optimization of capital expenditure, reduction of US dollar exposure, review of tower lease contracts.
Despite these financial challenges, The Explainer gathered that MTN Nigeria maintains strong credit ratings.
In August, GCR Ratings, a Moody’s affiliate, affirmed the company’s national scale long and short-term issuer ratings at AAA and A1+ respectively.
The rating agency also maintained AAA ratings for MTN Nigeria’s existing senior unsecured bonds.
However, investor confidence appears shaken, as reflected in the company’s stock market performance.
MTN Nigeria’s share price has declined by 35.6% year-to-date, significantly underperforming compared to the NGX 30 index, which has posted gains of 31.7% as of Monday’s trading start.
The NGX 30 index tracks the performance of the thirty most liquid and highly capitalized companies on the Nigerian Exchange, making MTN Nigeria’s underperformance particularly noteworthy given its market position as a leading telecommunications provider.
