Ralph Mupita, Chief Financial Officer of MTN Group Ltd, the wireless carrier has said that the company is considering dropping its plan to raise capital through an initial public offering (IPO) on the Nigerian Stock Exchange.
Mupita told Bloomberg that the telco giant is considering other options of trading its shares on the Exchange, including listing by introduction, in which existing shares of MTN are listed on the exchange.
In an IPO, MTN would have raised fresh funds through listing but listing by introduction is a way of listing shares already in issue on another exchange and MTN would not need to raise fresh capital in the process. However, invrestors would be able to buy while existing shareholders would be able to sell the company’s shares. The listing approval procedures for a new listing by introduction are the same as those for IPOs.
Mupita said the new plan became necessary due to current market conditions that may not support the Nigerian business getting a fair value for its shares if an IPO was to take place.
The company’s stock has plunged in the wake of a dispute with the Central Bank of Nigeria (CBN) over the repatriation of $8.1 billion out of the country and a separate tussle with the attorney general’s office over $2 billion in back taxes.
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MTN is currently seeking board approval to go through with the new plan to list by introduction on NSE. MTN could complete the listing in Nigeria which is arguably its biggest market by the end of this year or first quarter of next year, the CFO said.
MTN was expected to list its Nigerian unit this year on the NSE as part of a settlement in 2016 over unregistered SIM cards that saw the Nigerian Communications Commission (NCC) slam a $5.2 billion fine on the telco before interventions by the South African government helped bring the fine down to about $1 billion (N330 billion). MTN has so far paid around N165 billion out of the N330 billion fine.
Initially, MTN was expected to complete its IPO in August in a deal expected to value the company around N3.9tn ($10.88bn) on the NSE according to Ventures Africa. Oreoluwa Runsewe told Ventures Africa that, “MTN hopes to raise $400m from the IPO to pay preference shareholders.”
According to Ventures Africa, the telecoms company planned to issue about 402 million shares, with one share split into 50 units to create 20 billion shares. With this, the company will be able to set the IPO price through book building.
Asides being on the hook for around $10.1 billion in Nigeria due to regulatory sanctions that is currently being contested in court, MTN’s decision to scrap its IPO plan may have been informed by the poor performance of their IPO in Ghana which significantly fell short of their target. MTN was only able to sell a third of the shares made available in its Ghana IPO, raising only around $236 million versus the $754 million the company sort to raise.
If the listing by introduction is completed later this year or in the first quarter of the year, existing shareholders will be free to sell their shares on the local bourse and cash out on their investment.
EMEKA UCHEAGA and CYNTHIA IKWUETOGHU
