Published On: Tue, Sep 6th, 2016

Hope rises in NSE as MTN taps July 2017 for listing

According to a reliable source, MTN may have fixed ‘this specific date’ to debunk wide-spread insinuations that it was really not keen on actually being listed on the Nigerian bourse, and was only buying time with the plan.

This is to enable it’s continue to benefit from the discount granted it on the initial fine sum of N1.04 trillion (about $5.2 billion) that had been slammed on it by the Nigerian Communications Commission (NCC).

Shortly after announcing its plan to hit the floor of the market last month, some industry watchers actually expressed skepticism over the promise, describing the pronouncement as a way of appealing for consideration over the N1.04 trillion slammed on it as fine for missing a deadline to disconnect 5.1 million unregistered subscribers.

Meanwhile, the plan by the telecoms giant to list next year is already creating excitement, with some industry experts positing that the offer would very likely be oversubscribed when it comes to the trading floor. They also express their optimism that other telecoms operators may before long also become listed in the nation’s capital market.

Speaking with BH, an investor in the stock market, Mr. Chris Adams, said the move by MTN will revolutionise the declining value of the market.

According to him, “It is a welcome development which I believe many Nigerians will like to experiment with. As unattractive as the stock market is today, I am optimistic that the MTN listing can lift the market. I will not hesitate to go for the offer.”

Recently, it was reported that some local stock broking firms have started lobbying to be part of the proposed listing. But many of them may also be acting in anticipation for the market’s rebound.

MTN Group which is currently valued at about $18 billion nets about 40% of the group’s profits from MTN Nigeria. With this one can infer that MTN Nigeria could be worth about $7.2 billion. The Nigerian Stock Exchange on the other hand is valued at about N9 trillion ($32 billion). Based on our back of the envelope calculation therefore, the projection is that this single additional listing on the bourse will increase the NSE market value by about 22%.

Since one of the major reasons people invest in any company’s shares is for capital gains in the form of dividends and bonuses, the planned listing by MTN is however being viewed with mixed feelings among some analysts.

On the reverse side for example, fears are being expressed by some prospective investors of MTN on the consequent post-listing viability of the firm in the market on account of the drag that the NCC fine which is yet to be fully paid would impose on it and thus lead to a reduction in its profits in the next few years.

When BH contacted MTN Nigeria’s public relations and protocol manager, Mr. Funso Aina, there was no response. Also there was no reply to the text sent to his phone before the paper went to bed.

Commenting on the resolve of the service provider to list, the National Association of Telecommunications Subscribers (NATCOMS) Chairman, Mr. Deolu Ogunbanjo, said the telecoms industry would be better off as other operators may also be competing with MTN in stock market.

“It is right step in the right direction. This is what we have been canvassing for over the years, so that our people will have a sense of belonging. This will further empower Nigerians and also protect the interest of MTN. It will be a win-win situation,” Ogunbanjo explained.

Shortly after announcing its listing plan, MTN had appointed Stanbic IBTC Capital Limited (together with its affiliates, The Standard Bank of South Africa Limited and Standard Advisory London Limited) and Citigroup Global Markets Limited as its Joint Transaction Advisors and Joint Global Coordinators with Stanbic acting as Lead Issuing House.

The company has been paying dividends every year since 2004 which could be linked to its profit-making capability.

Analysts wager that the benefits of MTN Nigeria listing on the floor of NSE cannot be underestimated. Government will get real value taxes and also gain immensely.

The charges of 5% VAT on commission and fees paid to stockbrokers when shares are bought and sold also offer a boost to the country’s economy.

Speaking with BH, the Managing Director of High Cap Securities, Mr. David Adonri, said the MTN listing would buoy the already depressed capital market. But he also stressed that if pressure is not mounted on the telecoms giant, it may yet defer its listing plan.

“It will be a very exciting phase in the history of Nigerian capital market if MTN Nigeria hits the floor of the Nigerian Stock Exchange as promised. But the reality is that the economy, including the market is in a depressed state. With this development, MTN has the strength and image to make good its promise with positive results in the market,” Adonri said.

MTN Group recently reported a $357 million half-year loss and cut dividend payouts. The significant loss was attributed to a hefty regulatory fine in Nigeria and underperformance in its South African home market.

The telecom firm admitted that the fine, a third of the initial penalty, wiped off 474 cents per share, from headline earnings. MTN Nigeria under-performance gave rise to the negative operational results for half-year 2016

To further prove the high probability of MTN listing its shares in the market through Initial Private Offer (IPO), the Minister of Communication, Adebayo Shittu, last week disclosed that the Federal government is proposing to introduce a bill called the Communication Service Tax CST bill which seeks to levy a 9% tax on telecommunication subscribers for users of various communication services such as voice call, SMS, MMS, Data usage from telecommunication service providers, internet service providers and Pay TV Stations.

The bill is being considered as a way to help increase the revenue generation capacity of the Federal government.

According to the Minister, “I have been reliably informed that the projected earnings from this effort is over N20 billion every month, which is an attraction to the government for funding our budget deficits. I must be quick to say that this government has a human face twined around its decisions.”

While MTN’s plan to list on the floor of NSE has created high hopes in many people within and outside the country, some industry watchers are expressing reservations over what they term its likely negative impact in an already bearish market.

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