Telecommunications giant, MTN is targeting over a billion dollars in bond issue on the Nigerian stock exchange to restructure its debt portfolio.
MTN Group Ltd. plans to raise as much as 400 billion Naira ($1.1 billion) in Nigeria before this year runs out as it seeks ways to fund local investments and replace existing debt with local currency.
“We want to gear up our debt on an operational level away from the holding structure,” Chief Financial Officer Ralph Mupita said in an interview. “The debt must be where the EBIDTA [Earnings Before Interest, Taxes, Depreciation and Amortization] is and we want to raise as much as possible in local currency.”
According to Reuters, South Africa’s MTN owns more than 70 percent of MTN Nigeria, which has under 300 existing shareholders.
Nigeria’s largest mobile carrier with over 54 million subscribers had agreed to the Nigeria Stock Exchange initial public offering as part of the settlement of a $1 billion fine imposed by local regulators in 2015; a penalty it incurred after missing a deadline to disconnect unregistered subscribers. Regulators originally set the penalty at $5.2 billion but later reduced it to encourage foreign investments.
The crisis led to the resignation of MTN’s then Chief Executive Officer, a first-ever full-year loss and a slump in the share price.
To fulfil a part of the penalty, the CEO had suggested back in November that the reported $500 million shares issue would be concluded by mid-year 2018 but also added that it depended on market conditions.
MTN’s net debt had risen to 57 billion rand ($4.6 billion) in 2017 from 52 billion rand ($4.2 billion) the previous year. And as reported by Bloomberg, the company is now planning to replace its dollar-denominated debt in its different units on the continent to debt in their various local currencies.
Since the Nigerian unit of the Johannesburg-based company earns its revenue in Naira, it only makes sense to refinance its debt and make other capital investments in the local currency of Nigeria. The Group has also taken similar steps in other units in Ghana and Ivory Coast.
But in its second-largest market, Iran, with 43 million customers at the end of 2017, the Group’s effort to repatriate about 200 million euros ($237 million) has been frustrated after U.S. President Donald Trump pulled out of the Iran nuclear deal and reinstated economic sanctions on the Islamic republic.