MTN Nigeria to raise $220 million to extend 4G network
MTN Nigeria is planning to raise the equivalent of almost US$220 million in a bond issue to expand its 4G network.
This sum – 90 billion naira – is on top of the 110 billion naira that the company raised last year in its first bond issue.
Modupe Kadri (pictured), the CFO of MTN Nigeria, said in an interview with This Day: “We took advantage of the low market rates to also set up a commercial paper programme, which was oversubscribed, and we decided to implement this bond program knowing full well that the rates should not stay at these levels.”
He said: “We have existing facilities with the banks, which were based on variable rates. Of course, as rates fell, so did finance costs.”
At the same time the company, which had a long-running dispute with the government of Nigeria over tax demands, revealed that it has paid 93.66 billion naira in taxes to the federal government of Nigeria for the fiscal year 2020.
In January 2020 the government backed down on a $2 billion tax demand on MTN, but the group then said it will invest $1.6 billion in the country.
MTN had four years of running disputes with Nigeria, which at one time was threatening a fine of $5.2 billion, cut to an agreed $3.9 billion and then by another 25%, for continuing services to unregistered SIM cards.
In 2018 the Nigerian Central Bank said MTN had used “irregular capital importation certificates” and told it to repatriate $8.1 billion – a sum cut to $53 million to settle the dispute in 2019.
In early January 2020 Nigeria backed down again, by dropping a $2 billion tax demand on MTN for allegedly unpaid taxes dating from 2007 to 2017.
The latest financial resources mobilised by MTN Nigeria fall within the framework of the Ambition 2025 programme launched at the beginning of the year by the MTN group and focused on its transformation into a digital operator.
The group listed the Nigerian operation on the Nigerian stock exchange in May 2019.
Kadri said in his This Day interview: “The proceeds [of the fund raising] will be used to finance the existing obligations and [install] critical network infrastructure to drive network expansion. We are coming out of a pandemic, so interest rates are generally down.”
He said: “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.”
According to the interview, “proceeds will also be used to position our fintech and digital businesses for accelerated growth and to unlock their full value”.
He said MTN plans to roll out its 5G network in Nigeria to advance the technology and help the government meet its broadband-based targets. “Our board of directors approved participation in the road infrastructure tax credit. This was a response to the federal government’s drive to encourage private-public partnership in the rehabilitation of some key critical roads infrastructure.”