MTN Nigeria falls deeper into debt, seeks additional N90bn

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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.

With its 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.

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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.

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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.

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.