The Nigerian arm of the African telecoms giant, MTN Group has debuted in the domestic debt capital market with the issuance of a dual-series commercial paper. This move is meant to support its working capital and general corporate purposes.
MTN Nigeria in a notice to the public announced its proposed series 1 & 2 commercial paper issuance of ₦50 billion each, under its ₦100 billion Commercial Paper (CP) Issuance Programme.
Investment bank Chapel Hill Denham Advisory Limited will act as the arranger of the issuance, which has a minimum subscription of ₦5 million as well as free and clear withholding taxes.
MTN Nigeria has a rating of Aa+ by credit rating agency Agusto & Co., reflecting the company’s history of strong financial performance. The telco has a record revenue in excess of ₦1 trillion (largest revenues by a listed corporate), stable and healthy operating profit metrics (+53 percent EBITDA margin), comfortably low leverage that is predominantly local currency, and strong free cash flow, Nairametrics reports.
The company’s financial report for the first quarter of 2020 shows that it added 4.2 million new subscribers in the period, bringing its total number of subscribers to 68.5 million, the largest in Nigeria. Its revenue also witnessed impressive growth as it raked in ₦329.2 billion ($845.4 million) during the period, a 16.7 percent growth from the same period a year ago. Profits after tax increased by 5.3 percent to ₦51.02 billion ($131.1 million).
Despite the impressive numbers, MTN’s voice traffic and voice revenue face serious challenges with the company witnessing a drop in voice traffic, especially in the mass market. “Voice revenue has experienced an immediate impact from the current macro disruptions,” MTN said.
The decline started in late March as the coronavirus pandemic and the drop in oil prices began to affect the Nigerian economy. Both developments have caused “a slowdown in economic activity and a reduction in people’s earning capacity,” the telco added.
But data traffic has been rising fast with MTN seeing a change in traffic patterns following the one-month presidential lockdown of Lagos, Abuja, and Ogun state as part of containment responses to tackle the COVID-19 outbreak.
While the pandemic has affected the outlook of several sectors from aviation and hospitality to banking and consumer goods, analysts expect better numbers from MTN Nigeria in the months ahead as data usage will surge among the populace with a huge number of Nigerians needing to stay at home to prevent the spread of the virus.