By Susan Olalere 
Lagos, Nigeria — MTN Nigeria Communications PLC (MTN Nigeria) has announced plans to secure N50 billion through the issuance of commercial paper (CP) under its N250 billion Commercial Paper Issuance Programme. The Series 11 and 12 CP issuances are aimed at fortifying the company’s working capital and expanding its financing sources, as disclosed in a recent notification to the Nigerian Exchange Limited and the public.
MTN Nigeria has increasingly leveraged the commercial paper market, viewing it as a vital tool to manage immediate cash needs and adjust its debt profile without solely relying on long-term financing. The funds from this issuance will help the telecom giant expand its infrastructure, enhance service delivery, and support the growing demand for digital and telecommunications services across Nigeria.
Why MTN Nigeria is Opting for Commercial Paper
The N250 billion CP programme enables MTN Nigeria to issue multiple series of commercial paper as required. This flexibility allows the company to access short-term funding with lower interest costs compared to traditional bank loans, helping MTN Nigeria maintain a balanced capital structure. For a company facing external loans totaling about N1 trillion — including N522.3 billion in short-term obligations — commercial paper provides essential liquidity while reducing reliance on bank loans.
The programme also positions MTN Nigeria to better navigate the fluctuating economic conditions in Nigeria, enabling it to meet cash flow needs and service short-term debt while managing interest expenses.
Supporting Financial Resilience and Liquidity
MTN Nigeria’s latest financial report as of September 2024 reveals negative working capital of approximately N1.49 trillion, noting the importance of maintaining liquidity. The CP issuance is not only a response to immediate operational requirements but also a reflection of MTN’s broader financial strategy. The funds will be allocated to cover operational costs, stabilize cash flow, and potentially reduce part of its short-term debt burden.
MTN’s Recent Commercial Paper Issuances
MTN Nigeria’s strategy of frequent CP issuance highlights its proactive approach to liquidity management. In December 2023, the company raised N72.1 billion through a CP issuance, preceded by an N52.9 billion issuance in November 2023, both allocated toward similar working capital needs. This ongoing access to the debt market demonstrates MTN’s approach to securing short-term liquidity to support its extensive loan portfolio and operational growth.
Further Details Expected
While the specific terms for Series 11 and 12 have yet to be disclosed, MTN Nigeria’s recurring CP issuances illustrate its commitment to maintaining financial resilience in a challenging economic landscape. The company is expected to release more details on the terms of the new CP notes in the coming weeks.
By maintaining a diversified financing approach, MTN Nigeria is better positioned to withstand Nigeria’s volatile economic conditions, ensuring stability for continued growth and service improvements across the country’s expanding digital ecosystem.
Christopher Ajewole
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