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MTN cuts debt with US$300m early settlement

By , ITWeb
Africa , South Africa , Nigeria , 05 Sep 2022

Following on from strong first half 2022 results, MTN Group has settled a US$300-million in Eurobonds with a 2024 maturity date.

According to a statement released by MTN, the development brings MTN’s dollar-denominated debt down to 35% of total holding company (Holdco) debt on a H1 2022 proforma basis.

ITWeb reported that in the first half of 2022, MTN service revenue 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,” ITWeb added.

In late August the operator invited eligible holders of the US$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 US$482-million which MTN claims was significantly more than the US$250 million originally intended for early settlement.

As a result, MTN raised the final acceptance amount to US$300 million, which will be settled on 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,” said MTN Group President and CEO 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 added that 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.”

MTN added that at end-December 2021, the Holdco leverage was 1.0x.

“The improvement in the first half of 2022 to 0.8x was boosted by the repatriation of R9.4 billion in cash from our operating companies (including R4.5 billion from MTN Nigeria),” the company stated.

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