By Peter Egwuatu, with agency report

MTN Group Limited, yesterday, disclosed plans to raise dollar denominated bond that would help it to pay for dividends, capital expenditure and the N330 billion ($1 billion) fine levy imposed to it by the Nigeria Communication, NCC.

MTN-Office

The MTN has mandated Barclays Bank Plc, Bank of America Corp.’s Merrill Lynch, Citigroup Inc. and Standard Bank Group Limited to arrange a series of fixed-income investor meetings in the U.S. and the U.K. starting September 9, 2016.

According to Reuters report, the MTN, which disclosed this in a statement, stated that the dollar-denominated bond offering “is expected to follow subject to market conditions.”

MTN’s move to attract funding comes after the company reported its first-ever half-year loss this month, partly caused by an agreement to settle the fine with NCC. The subscriber base of 233 million didn’t grow during the six months through June, while MTN is struggling to repatriate 15.4 billion rand ($1.1 billion) tied up in its Iran unit. “Pre-dividend free cash flow won’t cover payments of dividends and the fine in Nigeria this year and in 2017,” Alexandre Dray, an emerging-markets credit analyst at Gimme Credit LLC in Tel Aviv, said in e-mailed comments. “Therefore, the company needs to raise new debt or equity to keep a comfortable liquidity position.”

MTN issued a $750 million note in 2014 that matures in 2024, according to data compiled by Bloomberg. The company sold a 1.25 billion rand bond in 2010 which matures in July next year.

After reaching a record high in February, the yield on MTN’s dollar-denominated note has fallen as the carrier negotiated and finally successfully settled talks over its NCC fine. Having peaked at 7.11 percent on February 19,   2016, the note’s yield is now 4.81 percent and its spread to a similarly dated Treasury Bill has narrowed.

MTN is due to pay an outstanding N280 billion of the NCC fine in six installments over the next three years. The first payment, which MTN Nigeria says it has already settled, was due on July 8, 2016. “The net proceeds of the issue of the notes will be used for capital expenditures, to pay down working capital facilities and general corporate purposes,” MTN said in a preliminary prospectus sent to potential investors.

“We expect our annual capital expenditure in the medium term to increase in the coming years as we increase our capital expenditures in Nigeria and South Africa.”

The wireless carrier will consider a higher full-year dividend than the forecast 7 rand-a-share “if operating conditions improve materially,” the company said August 5, 2016.

MTN paid 13.10 rand a share in 2015, while the payout was set at 2.50 rand for the half year through June.