GCR Ratings (GCR) has upgraded the national scale long-term Issuer rating of MTN Nigeria Communications Plc to AAA and affirmed the national scale short-term Issuer rating of A1+, with a stable outlook.
This is according to a notice made available on the website of the Nigerian Exchange Group Limited (NGX) and seen by Nairametrics.
According to the notice, the recently concluded N110 billion series 1 unsecured bond issued by the telecommunications giant, was also upgraded with a nation scale long-term rating of AAA and a stable outlook.
It is imperative to note that the rating is the highest possible long-term and short-term ratings on GCR’s national rating scale, and MTN Nigeria is the first mobile network operator in Africa to be accorded such ratings by GCR.
According to GCR: ‘’ The ratings accorded to MTN Nigeria Communications Plc reflects its very strong competitive position as the leading provider of telecommunication services in Nigeria, as well as its strong earnings and cash flow which has supported a robust financial profile.’’
GCR further noted that MTN Nigeria has progressively sustained its earnings, with a five-year CAGR of 14.1% to FY20. Similarly, Its EBITDA margin remained strong around 50%-53% in the recent period, trending above international peers.
In light of this, GCR expects MTN Nigeria to continue to maintain strong revenue growth given its growing infrastructure, and Nigeria’s favourable demographic. On the other hand, GCR expressed concerns over the continuous devaluation of the Naira, noting that it is capable of increasing pressure on the unhedged operating and capital costs, as a large component of spending relates to US Dollar denominated imports, impacting the earnings margins.
Meanwhile, the CEO of MTN Nigeria, Karl Toriola opined that the recent ratings demonstrate the resilience of the telecommunications giant, he said: ‘’We are delighted with the outcome of the GCR rating. This demonstrates the resilience of our business and positions MTN Nigeria as the benchmark of reference for the information and communications technology sector for long-dated, fixed-term instruments. As we continue to invest in our network and strengthen our risk management processes, we remain focused on sustaining and accelerating growth in line with our Ambition 2025 strategy.’’
