MTN Nigeria Seeks SEC Approval To Tap Debt Market

The Nigerian unit of South Africa’s telecoms group MTN has applied to the Securities and Exchange Commission (SEC) for approval to borrow from the capital market in the first quarter of this year, its chief financial officer said Wednesday.

“There is an application with SEC. We are going to tap the market to optimise our funding cost,” MTN Nigeria CFO Modupe Kadri disclosed during a call with analysts, as reported by Reuters.

Kadri, however, did not disclose how much the company plans to raise in what is an apparent move to take advantage of the historically-low yields in Nigeria. As the devastating coronavirus pandemic hit the Nigerian economy hard last year, the Central Bank (CBN) cut rates twice to reduce borrowing costs for the government. 

This creates opportunities for firms to sell debt at lower and more attractive rates compared to when the apex bank kept rates high to make Nigerian bonds attractive to foreign investors. 

Many listed companies are taking advantage of the low yield regime to raise needed funds through bonds and commercial papers. Lagos-based United Capital in December concluded a debt raise through N15 billion CP.

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The scarcity of dollars in Nigeria is a challenge to raising the required funds but Kadri hopes that as oil prices start to recover, dollar liquidity would improve and added that the ability of investors to bring funds into the country will help the naira. 

MTN is looking to repatriate $250 million to $300 million in backlog dividends and had so far brought back about $20 million, the CFO said. The company is also at an advanced stage in renewing its operating licence, which is due to expire in August.

Pandemic-helped growth

MTN Nigeria last week released its full-year 2020 audited financial statements. Revenue for the period grew by 15.1% year-on-year to N1.3 trillion last year compared to N1.1 trillion in the previous year.

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Pretax profit rose to N298.9 billion while profit after tax climb 0.9% to N205 billion. The company’s market price per share grew by 61.8% to N169.90 while market capitalisation stood at N3.4 trillion as of the end of 2020.

MTN in a statement said the adoption of its data and digital services accelerated as lockdowns and gathering restrictions were imposed, and work-from-home became the norm for many. Across the world, the telecommunication sector saw growth, accelerated by the pandemic.

Asked about the outlook for growth, Kadri said: “What we have done is to put in place trade lines in excess of $180 million, backed by naira … at different terms to help finance capital expenditure.”

MTN Nigeria (MTNN) share price closed the last trading session on Thursday at N170.