MTN Nigeria Communications PLC has announced its intention to raise N50 billion through Series 11 and 12 issuances of commercial paper under its N250 billion commercial paper Issuance Programme, marking another strategic move to enhance short-term liquidity and diversify funding.
The initiative, disclosed to the Nigerian Exchange Limited (NGX), seeks to shore up working capital while reducing reliance on long-term loans, especially as MTN navigates Nigeria’s increasingly volatile business landscape.
With an external loan portfolio approaching N1 trillion and over N522.3 billion in short-term obligations, MTN Nigeria has adopted a pattern of tapping into the debt market, a strategy that analysts view as essential for maintaining operational stability amid significant external financing demands.
“MTN’s regular commercial paper issuances demonstrate a balanced approach to capital management, where the company can meet immediate cash flow needs without inflating its long-term liabilities,” remarked Ayo Aluko, a Lagos-based financial analyst.
MTN’s latest commercial paper issuance reflects a proactive approach to managing its capital needs and reducing interest costs associated with traditional loans.
This aligns with MTN’s goal to strengthen its capital structure and support expansion efforts to meet rising demand for telecom and digital services across Nigeria.
According to MTN’s financial statement for the third quarter of 2024, the company reported a negative working capital of approximately N1.49 trillion, underscoring its need for flexible financing.
Recent commercial paper issues by MTN have followed a similar trajectory: in December 2023, the company raised N72.1 billion, and in November 2023, an additional N52.9 billion—both to address working capital demands.
Analysts believe that regular commercial paper issuance may position MTN Nigeria to optimize its debt profile over time, while enabling it to manage liquidity fluctuations effectively.
“By issuing commercial paper, MTN can stagger its repayments and avoid locking capital in long-term debt, which is crucial for sustaining cash flow in a high-interest environment,” added Ifeoma Eze, a telecom sector analyst.
The N250 billion commercial paper programme further enables MTN to issue commercial paper in multiple series as needed, offering financial flexibility to adapt to short-term cash flow demands.
Analysts note that the issuance aligns with MTN’s broader goals of financing its operational costs, supporting infrastructure expansion, and meeting increased demand from a growing customer base.
MTN is expected to release detailed terms for the Series 11 and 12 notes soon, giving investors further insights into the company’s debt management approach amid Nigeria’s economic headwinds.
In the current economic climate, MTN’s financial strategy is designed to enhance liquidity while shielding its debt obligations from adverse market conditions, particularly as interest rates remain high.
This approach, according to Aluko, allows MTN to sustain its market position and continue its capital expenditure programs without the financial strain of traditional loan structures.
