MTN eyes more cash with N90bn bond, shares sale

As it eyes expansion in infrastructure deployment in Nigeria in the next three years and debt refinancing, MTN Nigeria is intensifying activities around growing its cash reserve.

The largest telecom operator in Nigeria had on Thursday, November 4, concluded the signing ceremony of the N89.999 billion, 12.75 percent 10-year fixed-rate bond that was approved by the Securities and Exchange Commission (SEC) in October.

The nearly N90 billion bond is the second tranche of the N200 billion bond issuance programme by MTN Nigeria. The first tranche of the bond was oversubscribed and enabled the telco to raise more than N110 billion of a 7-year 13 percent fixed-rate bond due in 2028. The company expects it to be paid twice in 2027 and the next year.

MTN Nigeria had in August said it planned to invest N600 billion to expand its network infrastructure nationwide over the next three years to improve telecommunications services across Nigeria. At the signing ceremony, Karl Toriola, CEO of MTN Nigeria, said the bond issuance was part of efforts to source funding for the N600 billion plan.

The South African-owned company has also commenced the sale of N101 billion (244 m) worth of shares in its Nigerian unit.

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MTN Nigeria

According to Toriola, the primary focus of the share sale will be the retail segment in the Nigerian economy. The company plans to make retail operators part of its future growth strategy by making them investors in the company.

A statement from the company’s headquarters in Johannesburg notes that the telco will offer 575 million shares in MTN Nigeria Communications plc, which has been listed in the Nigerian Stock Exchange since 2019.

The process to sell shares will be done by way of a bookbuild to institutional investors and a fixed price to retail investors. The offer opened in November with a bookbuild to institutional investors, after which a fixed price will be announced for retail investors. The offer is expected to close in December, and analysts expect this to bring significant buzz to and further help to deepen the Nigerian stock exchange.

“This is the first step in our previously communicated statement of intent to sell down approximately 14 percent of MTN Group’s current shareholding in MTN Nigeria,” the company says.

A spokesperson for Chapel Hill Denham said on Thursday the price for the retail investors would be reflective of the market.

MTN Nigeria also wants to be seen as an indigenous company contributing to the economic development of the country. In recent times, the telco had taken its ambition to the Federal Government where it sought its approval to reconstruct the Enugu-Onitsha Expressway under the road infrastructure task credit (RITC) scheme.

“This is in response to the government’s drive towards public-private partnerships in the rehabilitation of critical road infrastructure in Nigeria,” Toriola had said in a statement, noting, “We intend to participate in the restoration and refurbishment of the Enugu-Onitsha Expressway.”

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