MTN Nigeria Borrows N125 billion For Operation Amid Musk’s Starlink Threat

MTN Nigeria has lent N125 billion through Commercial paper issuance, which was overbooked by investors in the securities market.

In a corporate document dated 6 March 2023, MTN Nigeria informed the company’s shareholders and the investing public of the money borrowed from the capital market. 

The telecommunications company said it offered the interest-bearing promissory note in exchange for the capital of N100 billion, but due to oversubscription, it was able to raise N125 billion.

Companies with short-term plans that need urgent financing, but don’t want to source capital in the banking system, often issue commercial paper or promissory notes to raise funds from investors in the securities market, and in return, pay the cash back with interest. 

This is a way for companies to diversify their credit sources, which include bond issuance, bank debt, equity sales, and commercial paper amongst others. 

Prime Business Africa understands that the funds are usually used to finance working capital and existing debts that have matured. 

Detailing the events around the commercial paper issuance, MTN Nigeria said: “MTN Nigeria Communications PLC (MTN Nigeria) hereby notifies Nigerian Exchange Limited and the investing public of the successful completion of its Series 4 & 5 Commercial Paper issuance under its Nl50 billion Commercial Paper Issuance Programme (the CP Issuance). 

“MTN Nigeria sought to raise N100 billion, and the transaction was 125% subscribed, with a total of A125 billion raised. 

“MTN Nigeria issued 188-day commercial papers at a yield of 11.00% and 267-day commercial papers at a yield of 12.50%. The CP Issuance was completed on 1 March 2023. 

“The CP Issuance is part of MTN Nigeria’s strategy to diversify its funding options. The proceeds will be utilised for its short-term working capital and funding requirements.” 

Meanwhile, MTN raising funds for certain requirements comes amid Starlink’s entry into Nigeria’s telecommunications market. 

Starlink is owned by the world’s richest man, Elon Musk, who has been investing heavily in the internet company in a bid to expand its service, which is a threat to MTN’s operation in Nigeria.