MTN Group Ltd is preparing an Future Public Offering (FPO) which will see it raise up to N340 billion from domestic investors as it seeks to sell down its Nigerian stake.
Nigerian investors currently own about 19.4 percent of MTN Nigeria, while 78.8 percent is owned by South Africa’s MTN Group.
MTN said on Thursday that it is looking to reduce majority ownership of its business in Nigeria, the carrier’s biggest and most profitable market, after the country’s attorney general (AGF) dropped a claim for $2 billion in back taxes.
Johannesburg-based MTN had earlier in 2019 listed its shares on the Nigerian Stock Exchange (NSE) by way of introduction, whereby it did not raise any money.
“This is just the beginning; we still intend to pursue a future Public Offer giving more Nigerians greater access to the MTN opportunity,” said Ferdi Moolman, CEO of MTN Nigeria, at the time.
About 14 percent of the Lagos-listed operation could be sold, MTN said, reducing the stake to about 65 percent.
The move will be welcomed by domestic institutional and retail investors as it will help broaden the shareholder base of the Telco firm and make its shares more liquid and engineer better price discovery.
MTN Nigeria (MTNN) closed trading flat at N120 per share on Thursday, giving it a market capitalisation of N2.4 trillion, while the Group’s shares on the Johannesburg exchange gained for the third straight day as investors cheered the company’s plans.
“There is still a cloud of worry given MTN’s experience in Nigeria,” an analyst told BusinessDay. “The tax case is not completely off but has been referred to appropriate quarters.”
MTN is raising money to pay down debt and simplify a portfolio of telecom businesses that spreads across Africa and the Middle East.
The company is also focusing investment on its main markets – including $1.6 billion for Nigeria announced on Wednesday – and is “seriously investigating” the prospect of taking part in a planned privatization of Ethiopia’s phone monopoly, according to a spokeswoman.
On Thursday, the Federal High Court in Lagos struck out an N3bn fundamental rights enforcement suit by MTN against Abubakar Malami, the AGF.
“MTN Nigeria is definitely doing well when you look at the company’s financial scorecard but regulatory risks remain a major concern,” said another analyst that spoke on condition of anonymity. “Investors typically adopt a wait-and-see approach in times like this.”
Africa’s biggest mobile-phone company has generated about 14 billion rand since kicking off a strategy to offload non-essential businesses in March, and is ready to step up the process, MTN said on Thursday. IHS Holdings Ltd., the continent’s largest operator of wireless towers, is on the list and the Johannesburg-based company valued its stake in the firm at 23 billion rand in June, a spokeswoman said.
IHS is reviving plans for an initial public offering, people with knowledge of the situation said last year, after scrapping a US share sale in 2018. The Mauritius-based company declined to comment.
MTN has sold minority stakes in two tower joint ventures for $523 million, redeemed preference shares in Nigeria and offloaded e-commerce businesses such as booking site Travelstart since starting the sale program last year.
MTN had on Tuesday committed to investing the sum of $1.6 billion in its operations Nigeria to strengthen its network and systems.
“We are fully aligned with the strategic agenda of the government and are committed to strengthening the digital economy of the country,” said Mcebisi Jonas, MTN chairman, during a visit to President Muhammadu Buhari at the State House, Abuja.
The MTN Group chairman said he was visiting along with top executives of the telecoms company to show appreciation to President Buhari “because most of the issues we raised during your visit to South Africa have been addressed, and there is progress on the remaining ones.”
Buhari assured the group of the Federal Government’s commitments to providing an enabling environment for businesses to succeed in the country.
“Partnerships between the public and private sectors remain the most viable means of bringing prosperity to the masses,” he said.
President Buhari also applauded MTN Group’s proposed rural telephony project, which he said: “will surely complement our economic diversification and financial inclusion programmes by connecting the producers based in rural areas to consumers located in our major towns and cities.”
“I am pleased to hear of the progress you are making in Nigeria, especially in supporting our digital inclusion programmes,” he said.
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