By Ayomide Otitoju
MTN Nigeria Communications Plc has announced plans to issue up to N50 billion in Series 11 and 12 commercial paper notes as part of its N250 billion commercial paper program. The company disclosed this in a corporate notice filed with the Nigerian Exchange Limited on Monday, signed by Company Secretary Uto Ukpanah.
This issuance follows MTN’s successful N72.1 billion Series 10 commercial paper raise in late 2023, which achieved a 149% subscription rate. The 266-day paper was issued at a 16% yield, underscoring investor confidence. According to MTN, the latest issuance aims to diversify its funding sources and will be directed toward meeting short-term working capital needs.
Despite this capital move, MTN Nigeria reported a loss of N1.9 billion for the first nine months of 2024. The telecommunications giant attributed this to ongoing naira depreciation, escalating energy costs, and high inflation. In a statement accompanying the Q3 results, CEO Karl Toriola highlighted that, while service revenue grew by 33.6% to N2.4 trillion, earnings before interest, tax, depreciation, and amortisation (EBITDA) declined by 5.3% to N860.2 billion, with a reported loss after tax of N514.9 billion.
Toriola noted, “Our underlying operational performance remains robust, underpinned by our resilient business model and operational agility, even in challenging conditions.” He emphasized that currency depreciation, inflation, and rising energy expenses continued to weigh on the company’s profitability. The implementation of value-added tax on leases from September 2023 further impacted EBITDA performance year-on-year.
The depreciation of the naira led to foreign exchange losses, driving MTN Nigeria’s retained earnings and shareholders’ equity into negative territory, at N723 billion and N573.6 billion, respectively. Adjusted for net forex losses, MTN’s profit after tax would have been N118.5 billion—a 59.2% decrease year-on-year. Further adjustments for foreign exchange impacts on operating expenses would have increased profit after tax by 13.3% to N367.1 billion. Despite these financial pressures, MTN generated a positive free cash flow of N536.8 billion, up 21.9% due to favorable working capital movements and reduced capital expenditures.
Looking ahead, Toriola outlined five key strategies to address MTN’s negative capital position, including potential tariff hikes and reductions in dollar-denominated obligations, as part of the company’s strategy to enhance financial resilience in Nigeria’s volatile economic climate.
