MTN Group Limited is seeking to raise $1 billion in an Initial Public Offering (IPO) targeting the listing of its Nigerian unit in 2017, sources familiar with the matter tell BusinessDay.
The telecommunication company has before now, taken steps towards the listing of its shares on the Nigerian Stock Exchange (NSE), a condition placed on it as part of its agreement with the Federal Government of Nigeria to significantly reduce its N1.04 fine for failing to disconnect 5.2 million unregistered SIM cards.
“The target is realistic and can be met, because as we all know, MTN has previously been in trouble with the fine imposed on them and because of that, they are being very careful with whatever steps they have to take,” Oladipupo Salako, a telecoms analyst, told BusinessDay.
In July, the group showed commitment to its agreement to list on the NSE by appointing listing advisors and announcing that its board of directors has commenced preparations for a listing next year.
“They must have consulted experts before setting any targets and if they thought it wouldn’t be possible, they definitely would not set targets,” Salako added.
MTN Group Limited had said in a previous statement that it appointed Citigroup Inc. and Standard Bank Group Limited as advisers to list the wireless company’s Nigeria business on the NSE.
With minority shareholders in its Nigerian business, reports from wire services say this minority may sell down their holdings or exit entirely, while MTN may offer a small portion of its stake in the business.
BusinessDay contacts at MTN Nigeria however said that they are not aware of any targets for proceeds and have not been briefed by the group considering specific target amounts.
Negotiations over the fine contributed to a 38 percent decline in MTN’s share price since October 2015. MTN Group also expects to report negative basic headline earnings per share (HEPS) and basic earnings per share (EPS) for half-year (HY) 2016 primarily as a result of the regulatory fine imposed on MTN Nigeria, following a resolution with Federal Government of Nigeria on June 10, 2016, according to a wire services report.
However, analysts say it is possible for MTN to reach or even surpass its $1billion proceed target as Nigeria is MTN’s biggest money spinner, with the largest number of subscribers, 39 percent market share. MTN Nigeria also accounts for more than a third of the company’s sales and profit with market value $15 billion.
Airtel Nigeria, the second largest telecommunications company by revenue (with a customer base of 30 million) is also mulling a listing on the Nigerian Stock Exchange (NSE), after Segun Ogunsanya, the company’s Chief Executive Officer (CEO), said the Nigerian unit of Bharti Airtel Ltd “is not shying away from a listing, we are certainly considering it, and we are in talks with the NSE,” Ogunsanya said at a recent conference in Lagos.
Experts tell BusinessDay that another listing from the Telco sector would further deepen the liquidity of the stock market.
“It is also a positive development for investors and the companies to be listed,” said Kyari Bukar, CEO of Central Securities Clearing Systems Ltd, the clearing and settlement house of the Nigerian Capital Market and the NSE, by phone.
“It would bring additional transparency and boost confidence in the stock market,” Bukar added.
The NSE All Share Index (ASI) jumped 2.9 percent to close at 28,419.92 on Thursday, from 27,599.03 points Wednesday, while Market Capitalisation jumped 3.6 percent to N9.76 trillion from N9.47 trillion on Wednesday.
Trade for the first half of the year have dipped by 44 percent to N624 .4 billion ($2 billion) from a year earlier, according to data from NSE’s website.
Oscar Onyema, chief executive officer of the bourse, said “We have seen total reduction in market activity, both domestic and foreign, the foreign even more,” at a conference in Lagos.
When the Central Bank of Nigeria removed the 197-199 naira to dollar peg on June 20 after more than a year, “we saw significant activity in the market and then it tapered off,” Onyema said, adding that foreign investors “want to see that there is credibility in this floating rate regime. They also want to see clarity in the allocation of foreign exchange.”
Onyema also said the bourse has put on hold plans to introduce depository receipts that would allow investors to purchase foreign company shares in naira. It “was put on hold because of this foreign exchange issue,” he said.
Segun Ogunsanya, head of Airtel Nigeria, said at the same event, that acute fx shortages have “impacted us significantly in the way we invest in new technologies,” he said.
JUMOKE AKIYODE & LOLADE AKINMURELE with agency reports
