By OKEY ONYENWEAKU 

Airtel Africa’s debut in the Nigerian capital market may not have met stakeholders’ expectations when it listed on the Nigerian Stock Exchange, Tuesday by way of cross border secondary listing of 3.75billion ordinary shares at an offer price of N363 per ordinary share.

Cross border listing involves companies that trade on the stock exchange of their home country and also on a stock exchange in another country.
Whereas the listing of the company’s shares lifted the market by N1.4trillion or 10.7 per cent to close at N14.3 trillion, its stock price has lost value in the last four days from the N399.30 per share it had attained on the listing day to N323.50 per share at the close of business on Friday, July 12, 2019. The stock lost 18 per cent or N75 in four days.

Listed on the trading floor of the London Stock Exchange at 80 pence at the beginning of last week, the Airtel shares have made an odyssey of sorts in just one week of its coming to the Lagos Stock Exchange. After rising to N399 per share at the close of business on Tuesday, details show that it fell from this peak of N399.30 per share to N359 on July 10, 2019.

Not done, the stock price slipped further to N323.50 per share on Thursday, July 11, 2019 and traded flat on Friday.
Again, though the listing of Airtel Africa tended to lift the market initially, the impact was so insignificant that the equities market remained negative at -9.11 per cent year to date return.
However, even before Airtel’s coming to the Nigerian bourse, there had been doubts over whether any initial market lift brought about by its entry could be sustained and not just be a ‘flash in the pan.’ After the advertised outcome of the first week of trading, some more cock-sure industry observers appear to be heaping the blame of the weak market performance of the stock upon its listing on the weak fundamentals of the economy.

Whereas it is difficult to predict with certainty the direction of the market, analysts believe that the sudden market appreciation may not be sustainable given the vagaries of the unstable macro- economic environment.

How sustainable is the market growth induced by Airtel’s listing?
Looking down the line, economists do not expect any magic from a country with a mono-economy and which is yet to cultivate other sectors enough to grow her broad economic fundamentals across multiple positive performance tracks.

With a dismal growth of 2.1 per cent in Q1 2019, the Nigerian economy lost out on meeting the set target of about 3 per cent growth. In a mono-economy that is substantially dependent on the vagaries of the price of crude oil for revenues, not much has been put in place to galvanize productivity in other sectors for significant growth.

Sadly, this is even when the country’s population growth rate is put at above 3 per cent annually alongside a corresponding unemployment rate of 23 per cent. These continue then to defy the Economic Recovery and Growth Plan (ERGP) which industry analysts also doubt is not even being implemented even as it betrays no clear vision.
Both international and domestic investors have also complained about the misnomer of multiple exchange rates, the incidence of multiple taxation and even higher taxation burdens on products like tobacco and alcohol that have tended to bruise firms in those sectors among other concerns. This is even as the worrying spate of insecurity has removed sleep from the eyes of many and created a huge sense of fear and foreboding about the future direction of the country.

Whereas the government under President Buhari believes it has delivered on its three major promises, namely security, tackling corruption and growing the economy, analysts are quick to point out that there are still mounting incidents of escalating acts of aggression by the Islamist sect, Boko Haram, alongside the menace of the Fulani herdsmen which has barely been tamed.

In addition, they observe, the economy still lacks the deserved propulsion to grow evenly while the anti- corruption war is in their view also, just a surface move. There is a strong sense of discomfort that significant growth can scarcely be achieved by firms that are operating in an economy that is barely growing overall.

While some analysts aver that Airtel may have been encouraged to list because MTN’s earlier listing had seemed successful, the broader reading however is that both firms are really not going to have things easy going forward, given the volatile environment and fluctuating economy.

Commenting on the listing, Mr. Oscar Onyema, Chief Executive Officer, NSE, commended Airtel Africa for taking the bold step to list on the Exchange. He said: “Listing on the Exchange reaffirms Airtel Africa’s long-term commitment to expanding opportunities and providing everyday services to Africans and Nigerians in particular.

It also indicates the firm’s belief that our platform, which has a total market capitalization of N25.20 trillion across various asset classes, remains a veritable avenue for raising capital and enabling sustainable national growth. This listing serves to deepen the telecoms and technology sector for investors and provides an opportunity for a wider group of Nigerians to be part of the African telecoms growth story.

“Today’s listing is a promising development in Africa with Airtel Africa being the second company to have its ordinary shares listed on both the London Stock Exchange and the Nigerian Stock Exchange. This gives credence to the successful partnership between the two exchanges. I encourage similar situated companies to explore the different opportunities for raising capital on the Exchange’s platform.”

Meanwhile, performance across sectors on the NSE was negative as five indices closed in the negative. This is even as analysts say that whereas the listing of Airtel Africa which has finally brought the two big telecoms companies in the country to the equities market as had long been canvassed by market expansion buffs, the timing was not the best for them given the weak economy.
Reviewing the stock’s performance, Muhammed Jamiu Kayode of APT Securities Limited, says the drop in price was due to low demand for the stock, saying: “It is because there is no buyer for the stock, and a lot of analysts have realised that it is too expensive at that price. It is likely that the stock may depreciate again; it is highly priced.”

Similarly, the President, Constant Shareholders Association, Shehu Makail, opined that the company listed at a very high price, “The price placed on Airtel’s shares is not favourable presently due to the harsh economic situation in the country. The purchasing power is low due to uncertainties surrounding this administration and their policies.

“Overall, the listing is a good development, as it will boost the sector because I believe that some interested investors may want to take positions now, but the price offer is definitely too high for retail investors which may affect the movement of the stock.”

Airtel has had a chequered history since it established in Nigeria in the early 2000’s.The company which is today named Airtel Africa has changed name several times. The company which was the first to establish and go live in 2001 as GSM had been known as Econet Nigeria in 2001. It became V-Mobile after a new management came when the previous was sacked for failing to participate in an alleged bribery transaction that involved some powerful politicians in Nigeria. ”The parent company of the South African-based multinational sent external auditors and lawyers from London to Nigeria. They immediately dismissed all the senior executives sent to Nigeria to run the company and left in a hurry!
Although they fled the scene of the crime and returned to their country — after admitting even to both the US Justice Department and the EFCC that the money had been paid out – the stolen funds were never returned to the Nigerian people, even to this day”, its former Managing Director, Mr. Strive Masiyiwa recalled.

”The shareholders found another operator, this time from the Middle East.
They sold this new operator the control of the company even though Econet Wireless Nigeria had the “right of first refusal” over any sale. They simply ignored that provision in our agreement. This was illegal, both according to our shareholders agreement and Nigerian Company Law. It was left for us to take up the fight in another forum, the Nigerian courts.”, he added.

This company became Celtel and later Zain. It has not been determined what long-term impact the fact that the company has had serious platform and management crises over the years and consequently changed its leadership and brand image several times has had on its present brand appeal and particularly as it has to do with investors’ confidence in the company and stock as entities that can be trusted to stand and soar over time. But the fact of its also being traded on the London Stock Exchange would no doubt be a mitigating factor in discussions over the long-term stability and capacity to perform of the company, the brand and the stock.