N89.999 Billion Series II Bond: MTN To Invest Proceeds In Network Expansion

Following approval from the Securities and Exchange Commission, MTN has launched the book build in respect of the Series II 10-Year Fixed Rate Bond (Series II Bond). The telecommunications company had successfully raised N110,001,000,000 through the Series I bond in May 2021 and is set to raise N200,000,000,000 through Series II.

MTN’s Chief Financial Officer, Modupe Kadri, in a recent interview with Arise TV, stated that the bond issuance is 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 will be used to finance the existing obligations and put into the network for critical network infrastructure to drive network expansion.

In his words, “We are coming out of a pandemic, so interest rates are generally down. We have existing 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 gotten from Series II Bond will be used for the expansion of 4G network as there has been an increase in data usage following the COVID-19 lockdown. The telco also intends to increase its overall 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 concluded 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.