The prolonged lull in Nigeria’s initial public offering (IPO) market will soon see some level of activities following MTN Group’s restatement of its commitment to list the Nigerian unit on Nigerian Stock Exchange (NSE) before the end of 2019.
“We had very good meeting with Oscar Onyema, the CEO Nigerian Stock Exchange, earlier in the week,” said Rob Shuter, MTN Group president and CEO, in an interview on the sidelines of the World Economic Forum (WEF) in Davos.
While listing activity on the NSE remained relatively low in 2018 with one listing against four delistings, the coming to Custom Street market by MTN Nigeria for IPO will open the doors for other telecommunications companies (Telcos) to approach the market for cheaper capital against consortium of bank loans which puts pressure on them.
“We are absolutely committed to listing MTN Nigeria on the NSE. We were very far advanced last year but, of course, as you can imagine some of the difficulties we faced. But we are absolutely intending to complete that listing in 2019,” Shuter said in the video interview seen by BusinessDay.
The listing of Nigerian unit of MTN Group will also help balance the Nigerian bourse and give investors options for sector rotation and reduce volatility associated with a single name dragging down the entire market.
Oscar Onyema, NSE CEO, while reviewing 2018 market performance and giving outlook for 2019 recently, said, “To enhance our listing prospects, we have strengthened our government engagement efforts on privatisation and listing of state-owned enterprises, and we expect to take advantage of opportunities within this space during the year.”
He noted that the market sentiments in the first half (H1) of the year will be driven by uncertainty in oil prices as well as the 2019 general elections.
“Accordingly, we anticipate volatility in equities markets first half of 2019, with enhanced stability post-elections,” Onyema said.
“We also intend to maintain our collaborative efforts with public and private sector stakeholders to advocate for market-friendly policies, and cater to infrastructure financing needs as well as other capital requirements necessary for sustainable economic growth. The Exchange intends to work with the private sector as well, to catalyse the listing of more companies,” he said.
MTN Group successfully completed the listing of MTN Ghana and its plans to list its Nigerian unit were affected by dividend issue raised by the Central Bank of Nigeria (CBN) and the Attorney General of the Federation.
MTN Group engaged extensively with the authorities in Nigeria to deal with the matters they raised. The apex bank has reached an agreement with the telecommunication giant to pay a fine of $53 million as against the initial $8.1 billion.
“MTN is cleared,” the CBN had disclosed.
The NSE will add a third major sector after financial stocks like banks and industrial names like Dangote Cement, once MTN Nigeria lists its shares. The Group plans to list its Nigerian unit on the Premium Board of the NSE which has the likes of Dangote Cement Plc, Zenith Bank Plc, FBN Holdings Plc, Access Bank Plc, Seplat Plc, Lafarge Africa Plc, and United Bank for Africa Plc.
MTN aims to list its Nigerian unit worth $5.23 billion in 2019 and raise funds to cut debt. It plans to raise at least $400 million (N140 billion) from the IPO to pay preference shareholders. With Nigeria making up 40 percent of MTN group revenues, combined with the still fast-growing telecommunications sector, MTN Nigerian unit could potentially fetch a $6.8 billion (N2.4 trillion) valuation when it lists, according to Lagos-based analysts.
Extensive local marketing to target Nigerian investors is planned as part of a retail offer and institutional book-build, which may also involve selected international institutions.
In show of commitment to move ahead with the IPO target, the group had appointed Chapel Hill Denham as lead manager for the initial public offering (IPO).
Other appointed advisers are South Africa’s Rand Merchant Bank, Renaissance Capital and Vetiva Capital. The telecoms firm also works with Stanbic IBTC Capital, Standard Bank of South Africa, Standard Advisory London and Citigroup Global Markets, as joint advisors and global coordinators, with Stanbic acting as lead issuer.
In the third-quarter (Q3) to September 30, 2018, MTN recorded improved operational performance in many markets. Group service revenue grew by 10percent year-on-year (YoY), ahead of the group’s medium-term target of upper-single-digit growth, supported by continued strong growth in voice and data revenue.
MTN Nigeria had an excellent quarter, increasing service revenue by 17.4 percent YoY, towards the upper end of its medium-term target for Nigeria of double-digit growth. This was led by a 52.5 percent increase in data revenue and 21.5 percent increase in outgoing voice revenue. Data revenue growth was supported by an increase in active data subscribers as well as more smartphones on the network, the result of various CVM and OEM-partnership initiatives.
Digital revenue declined by 28.5 percent following the continued optimisation of our value-added services (VAS) business. MTN Nigeria completed the final element of this optimisation, suspending auto-renewal of subscriptions, in mid-September which means that digital revenue will continue to be impacted by lower VAS revenue in the fourth quarter, after which we expect it to stabilise.
MTN Nigeria reported 17.2 million active data subscribers, up 15.1 percent quarter-on-quarter (QoQ), and 2.5 million MoMo customers, up 12.4 percent QoQ.
The EBITDA margin expanded to 43.2 percent in the first nine months of the year, up 4.7 percentage points from end September 2017, driven by the strong growth in revenue, mix of revenue and further cost optimisation efforts.
Iheanyi Nwachukwu
