Published On: Sun, Jul 15th, 2018

MTN to miss market listing target

By OKEY ONYENWEAKU

A weak domestic economy in Nigeria may force telecommunications giant MTN to shift its earlier proposed August 2018 date for a local listing on the Nigerian Stock Exchange (NSE). Analysts believe that the date shift will allow the parties to the Offer plan a more successful listing arrangement that would guaranty full subscription.

The Nigerian Stock Exchange

This becomes more pertinent when viewed against the background that the Securities and Exchange Commission (SEC) has denied not receiving any application from MTN Nigeria Limited regarding its proposed initial public offering (IPO).

SEC, however, responded to media reports on MTN’s envisaged IPO by saying, “MTN Nigeria Limited, is still to the best of the Commission’s knowledge, a private company limited by shares.

“As of the date of this circular, neither MTN Nigeria Limited nor any of its advisers/ representatives has filed any application with the SEC regarding the said IPO.”

It said the company could not have made any such request when there was no representative or adviser requiring any form of regulatory review from SEC.

“The commission welcomes filings aimed at deepening and broadening the capital market and stands ready to provide the necessary regulatory support. If MTN finally files a formal and complete application with the commission, it will be treated with the usual diligence and urgency that is applicable to all such filings,” the statement also said.

The denial of an IPO application by MTN to SEC signifies doubt over the extent of preparation on the part of MTN to achieve an August IPO deadline market observers have said.

Notwithstanding, the local media has been awash with news that MTN shares’ listing was going to take place in June before being moved to August 2018.

It is believed that the giant teleco may seek to raise about USD$ 500million to run its operations and pay down its mounting debt.

Not long ago, the Group’s President/CEO, Rob Shuter, had confirmed to Bloomberg that the IPO would take place before the end of 2018 without details of the exact time.

The company, according to analysts plans to target retail investors with about 30% of its ordinary shares, an amount higher than the statutory minimum floatation of listing companies on the NSE.

With about 51.4 million subscribers in Nigeria and about 230million in the world, MTN has appointed Stanbic IBTC Capital, Standard Bank of South Africa, Standard Advisory London and Citigroup Global Markets, as joint transaction advisors and global coordinators, with Stanbic acting as lead issuer.

Yet is not clear when the company wishes to list its long awaited shares on the local bourse.

But the report that the company’s spokesperson recently disclosed that MTN Nigeria Limited has yet to fix a definite date for the IPO is beginning to create confusion among prospective shareholders who have patiently waited to buy into the company.

Indeed, there is a strong suspicion that the uncertainty in the polity caused by the impending election slated to hold early next year might affect MTN’s plans to access the market for funds now. Many observers believe the charged political environment leading to elections, especially in countries like Nigeria are usually unstable times and may scare investors who fear there could be a change of government and policies that might also disrupt their projections.

Already many portfolio analysts have exited the market, causing the All share index to drift to a negative position. They fear that their resources may get trapped in a country which political direction is shrouded in uncertainty.

Aggravating this discomfort is the weak economy which has barely survived a deep recession. The economy is still perceived as feeble with only a growth of 1.9 per cent in the first quarter of 2018. More worrisome is that people have lost confidence in the economy, prompting a pullback by investors from staking their hard-earned money on any investment they are not sure of.

In such an unstable financial environment, not many will agree to invest their money even in the best of sectors of the economy let alone in a company like (MTN), though strong and viable but does not have a track record in the local bourse.

Business Hallmark research revealed that while many foreign investors have exited the market, others are reluctant to take any immediate position .

Unfortunately, year to date negative yield of -2.9 per cent from the capital market may not be funny for any investor. These analysts think might affect the price at which MTN may want to list.

However, there had been speculation that the MTN may put listing of its shares on hold until after elections in 2019. This will enable the company market its shares to investors who may be ready that time than now.

Besides a Managing Director of one of the big stock broker firms who pleaded anonymity expressed doubt that MTN can achieve the August listing target. He explained that even if MTN applies to SEC now, the review of its filings will likely delay the process which may not take less than three weeks, adding that additional three weeks would be required to sensitize the market.

‘’The timeline cannot work even if MTN is determined to speed up its listing process,’’ he confided to Business Hallmark.

With the controversies, analysts do not seem to have confidence that the listing of MTN is achievable in August this year anymore. As the time line for the listing of the company’s shares draws nearer, the time table for the listing becomes more confusing.

While BH could not receive a response to the E-mail sent to the company on the listing of its shares before press time, findings reveal that it recorded Profit Of $28B in Nigeria in 2017 and is said to be worth N3.2 trillion.

As controversy continues to shroud its listing date, reports show that it plans to issue about 402 million shares, with one share split into 50 units to create 20 billion shares.

Though MTN appears to want to create opportunity for retail investors to become part owners of the company, the company also plans to pay off some of its debts through the amount raised from the IPO.

MTN Nigeria is Nigeria’s biggest telecommunications provider had incurred $1billion a fine for regulatory breaches in 2015. It was brought down to N330billion.

MTN presently controls about 36 per cent of the local market; a figure that cannot be upgraded any time soon, which therefore means that the expected growth in corporate incomes will have to come from value added services rather than from new call lines and airtime sales.

So far MTN has edged ahead of its other General System for Mobile (GSM) rivals (beating back the second largest network Glo which was once considered the king of mobile data sales) and has gone ahead to consolidate a hold on the data segment of the business but with a few disruptions to its pole position from non-GSM operators such as Smile, Spectranet, and Cobranet.

However, analysts are still concerned about the company’s ability to grow its earnings. They argue that MTN is in a mature industry and that the opportunities for growing its customer base are thinning out.

Should MTN list, the Lagos share sale will be the biggest on the Nigerian Stock Exchange after Starcomms Plc, which raised $796 million when it listed in 2008, Bloomberg has recorded.

Sewa Wusu, Head, Research & Investment Advisory at Sterling Capital told Business Hallmark that the listing of MTN on NSE would be extremely positive for both the Nigerian market and its investors. Mr. Wusu said Nigerians have been clamouring for this development to enable them participate in being part owners of the telecom company’s which have been doing well in terms revenues among other key performance indices. According to Wusu MTN’s listing will not only get the NSE close to achieving its capitalisation target, but also benefit retail investors who are not able to invest in the company that has remained only for top end investors.

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