Following approval from the Securities and Exchange Commission (SEC), MTN has launched the book build for the Series II 10-Year Fixed Rate Bond (Series II Bond).
The telecommunications company had raised N110, 001,000,000 through the Series I bond in May, this year and is set to raise N200,000,000,000 through Series II.
MTN’s Chief Financial Officer, Modupe Kadri said that the bond issuance was to reinforce MTN Nigeria’s strategy of diversifying its funding sources.
As part of its expansion drive for Ambition 2025, its new growth strategy, the proceeds would be used to finance the existing obligations and put into the network for critical network infrastructure to drive network expansion, the telco said in a statement at the weekend.
“We are coming out of a pandemic, so interest rates are generally down. We have facilities with the banks which were based on floating rates. Naturally as the rates went down, so did finance costs. We took advantage of the low rate in the market to also establish a Commercial Paper (CP) Programme, which was oversubscribed, and we decided to put this bond programme in place knowing fully well that the rates are not likely to remain at those levels. So, it is better to have a long-term view because our business is highly capital intensive and that means you have to try to match those returns to your annual outgoings. This is what we are trying to do with the structuring of the bond programme.”
He further explained that some proceeds got from Series II Bond would be used for the expansion of 4G network as there had been an increase in data usage following the COVID-19 lockdown. The telco also intends to increase its coverage and expand to the rural communities to avail everyone an opportunity for digital connection using the MTN network.
Kadri also expressed the telco’s intention to further grow its digital businesses. According to him, “Proceeds will also be used to position our fintech and digital businesses for accelerated growth and to unlock their full value. In addition to this, MTN will continue to sustain an expense efficiency programme to strengthen its financial position and support margins.”
He added that the interview by highlighting MTN’s plans in rolling out its 5G network in Nigeria to advance the technology and help the government meet its broadband-based targets. The 5G technology is the next generation of wireless network technology that will expand the scope of mobile technology beyond the capabilities of LTE.