Table of Contents
Key Points
- MTN Nigeria plans to issue N50 billion ($30.4 million) in commercial papers as part of its N250 billion ($151.9 million) issuance programme to diversify its financing options.
- Despite a 33.6% rise in service revenue to N2.4 trillion ($1.46 billion) in 2024, MTN reported a loss of N1.9 billion ($1.2 million) due to naira devaluation and rising operating costs.
- MTN's free cash flow increased by 21.9% to N536.8 billion ($326.3 million), driven by favorable working capital movements and reduced capital expenditure.
MTN Nigeria Communications Plc has announced its plan to issue up to N50 billion ($30.4 million) in Series-11 and -12 commercial paper notes under its N250-billion ($151.9 million) commercial paper issuance programme. This was disclosed in a corporate notice filed with the Nigerian Exchange Limited on Monday, signed by the Company Secretary, Uto Ukpanah.
Funding for short-term capital requirements
This issuance follows the success of MTN's previous Series 10 commercial paper, which raised N72.1 billion ($43.8 million) in late 2023 with a 149-percent subscription rate. The Series 10 notes had a 266-day term and a yield of 16 percent.
According to MTN’s notice, the new issuance is part of the company’s broader strategy to diversify its financing options, with the proceeds allocated for short-term working capital needs. This move aligns with MTN’s efforts to ensure liquidity amid Nigeria’s tough economic conditions, including rising energy costs, naira devaluation, and inflation, which have impacted business operations.
Despite seeing a 33.6-percent increase in service revenue to N2.4 trillion ($1.46 billion) in the first nine months of 2024, MTN reported a N1.9-billion ($1.2 million) loss, primarily due to naira depreciation and escalating operational expenses. The company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) dropped by 5.3 percent to N860.2 billion ($522.8 million), while its loss after tax was N514.9 billion ($313 million).
Financial performance pressured by naira depreciation
MTN Nigeria CEO Karl Toriola acknowledged the company's robust operational performance in the face of a difficult market, but noted the bottom line was severely impacted by currency devaluation, higher energy costs, and inflation. He further highlighted that the introduction of value-added tax (VAT) on leases in 2023 put additional pressure on EBITDA.
Toriola also noted that if net foreign exchange losses were excluded, MTN’s profit after tax would have been N118.5 billion ($72 million), down 59.2 percent year-on-year. When adjusted for the forex impact on operating expenses, profit after tax would have risen by 13.3 percent to N367.1 billion ($223.1 million).
Despite these challenges, MTN delivered positive free cash flow of N536.8 billion ($326.3 million), up 21.9 percent, driven by favorable working capital and lower capital expenditure. The upcoming commercial paper issuance is expected to provide MTN with the liquidity needed to weather current economic challenges while continuing to invest in its operations.
