Bouyed by strong performance in the first half of fiscal year 2022, MTN Group has settled $300 million (R5.2 billion) in Eurobonds with a 2024 maturity date.
Africa’s biggest telco announced the early repayment today, saying this brings MTN’s dollar-denominated debt down to 35% of total holding company (Holdco) debt on a first half 2022 proforma basis.
MTN recorded blockbuster performance in first half of 2022, and in the six months, the group’s service revenue grew by 14.8% to R92.5 billion; earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 15.1% to R43.9 billion before once-off items; and the EBITDA margin expanded by 0.3 percentage points to 45.3%.
In the period, the telco accelerated the deleveraging of the balance sheet, boosted by the repatriation of R9.4 billion in cash from operating companies, including R4.5 billion from Nigeria.
Today, in an update to shareholders, MTN says in late August, it invited eligible holders of the $750 million Eurobond – due to mature in November 2024 – to tender their notes for purchase by the company for cash.
The offer attracted tenders of more than $482 million, which MTN says, was significantly more than the $250 million originally intended for early settlement.
As a result, MTN raised $300 million, which will be settled on Tuesday 6 September 2022.
“In line with our Ambition 2025 strategy, we are committed to deleveraging the balance sheet faster in line with our capital allocation framework,” says MTN Group president and chief executive officer Ralph Mupita.
“This week’s early settlement supports delivery of this commitment as well as of the execution and delivery of our medium-term guidance to maintain the Holdco leverage below 1.5x.”
MTN Group chief financial officer Tsholofelo Molefe says as the settlement would be funded from available cash balances, it did not affect the pro-forma Holdco leverage of 0.8x at 30 June 2022.
“However, on a pro-forma basis, the settlement improves the end-June 2022 ratio of non-rand to rand debt to 35:65 from the 42:58 ratio reported in the group’s interim results.”
According to MTN, at the end of December 2021, the Holdco leverage was 1.0x and the improvement in the first half of 2022 to 0.8x was boosted by the repatriation of R9.4 billion in cash from operating companies, including the R4.5 billion from MTN Nigeria.
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