MTNN proposes cash for shares during dividend payout

Mobile telecommunication giant, MTN Nigeria, has proposed a new dividend plan to its shareholders, substituting shares for cash during dividend payout.

In a document sent to the Nigerian Exchange Limited (NGX), 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.

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.”

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Shares for dividend payment will reduce MTN’s dependence on borrowing from the capital market and consequently increase its liquidity to do business.

Meanwhile, the telecom giant also proposed to merge its payment firm, Momo Payment Service Bank Limited and its digital arm, Yello Digital Financial Services Limited (YDFS).

In a document, MTN Nigeria appealed to the company’s shareholders to vote in favour of the motion for the merger at their Annual General Meeting (AGM) to be held on Tuesday, April 18, 2023.

MTN Nigeria said the merger of Momo Payment Service Bank Limited and Yello Digital Financial Services Limited will result in one company that will hold the Payment Service Bank license granted by the Central Bank of Nigeria (CBN).

The company that emerges from the merger will also be capable of performing super-agent services and other permissible activities.

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“It has been proposed that two of the Company’s subsidiaries (MoMo PSB and YDFS) be merged and integrated to form one company which will hold the Payment Service Bank license granted by the Central Bank of Nigeria and will also be capable of performing super-agent services and other permissible activities.

“It is envisaged that the merger will enhance value for the Company and its shareholders. Kindly vote in favour of the motion for the merger of MoMo PSB and YDFS,” the statement from the board of directors says.