Home Capital Market Investors upbeat over MTN’s application to SEC

Investors upbeat over MTN’s application to SEC

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By OKEY ONYENWEAKU

The Securities and Exchange Commission’s (SEC) confirmation of MTN’s application officially begins its journey to enlisting in the club of quoted companies on the Nigerian Stock Exchange (NSE) and investors on Broad Street are excited about event.

However, what has excited expectant investors most are the numerous commitments that the largest Africa’s telecommunications company has made including its strategic application to the SEC of actualising its plans of listing soon. There is more confidence now, analysts said, that the giant telecoms firm may list its shares than in the previous speculative periods.

Mrs Efe Ebelo, SEC Head, Corporate Communications, who confirmed receipt of MTN’s application said the company’s application was being processed.

“SEC can confirm that we are in receipt of an application from MTN requesting for registration of their existing securities’’, said SEC.

The  company which boasts of 52.3 million subscribers in Nigeria as at 2017 was mandated to join Nigerian listed companies after getting in trouble with regulators in 2018.

“What they applied for is registration for listing, that is just to convert to a publicly quoted company where, for now, private shareholders can dispose of their shares at the exchange,” said a Nigerian Securities and Exchange Commission official, speaking on condition of anonymity.

MTN Nigeria Plc had recently announced it has converted from a limited liability company to a public liability company ahead of its listing. The giant firm plans to list the Nigerian unit without raising any money from investors, and has said it would simplify its capital structure before listing on the Nigerian Stock Exchange.

A tentative date for the listing has been fixed for between the second and third quarters of this year 2019. Before now, huge speculation had trailed the listing of the giant telecoms company in Nigeria. Two times before now, in 2017 and 2018, there had been speculations of MTN listing on the NSE which did not materialize.

This time around there is a stronger assurance by MTN Nigeria CEO, Ferdi Moolman of its management’s resolve to ensure that the telco lists its shares by introduction on the NSE. As part of the process of listing its shares on the NSE, the company has completed its conversion initiativefrom a private company to public company (Plc).

Moolman explained that the disagreement MTN Nigeria had with the Central Bank of Nigeria (CBN) last year, had been one of the factors that delayed the firms listing plans.

“There was a lot of work that we did on the listing and our target was to list in 2018. We are a private company at the moment and we need to change to a public company before we can list.

According to him, “We need to send our directors for training to comply with the Securities and Exchange Commission and the Nigerian Stock Exchange requirements to be able to list and a lot of work went on at the backend on the listing.

Earlier in 2019, President and Chief Executive Officer of MTN Group, Mr. Rob Shuter, had hinted that MTN Nigeria would be listing on the NSE by the first half of this year by way of introduction. According to him, the conversion would enable MTN list easily and allow a free float in the Nigerian market of about 35 per cent. He explained that the listing will come in phases, Shuter said

“We will in phase two be doing a project to increase the Nigerian participation in MTN Nigeria, targeting more a free float of around 35 per cent than the free float we have today which is around 20 per cent. So, we aim to conclude at least the listing by introduction in the first half of 2019, pretty much as soon as we can, and then subject to market conditions, appetite and demand, we would, in phase two, do the sell-down,” Shuter added.

Chief Executive officer of the NSE, Mr. Oscar Onyema had expressed hope that MTN early this that MTN would take advantage of the many strategic plans at the capital market to list its shares this year.

“In 2018, the NSE will focus on rolling out its 2018-2021 strategic plan, which will position the NSE as a more agile and globally-competitive demutualized exchange, with a broader, diverse range of products and quality listings to meet the needs of our global investors and wider stakeholder community’’ said Onyema.

To this effect, market analysts believe that MTN must be one of the prime companies that the exchange is persuading to take advantage of the listing window. The company is believed to have expanded into most parts of the country covering the 36 states, and the Federal Capital Territory, Abuja. It has built capacities across villages, highways and cities and is recognized as the leading brand in Nigeria in its industry.

Getting the license cost MTN $285 million. It made that payment in January 2001. According to public documents, MTN has invested about $2 billion in building its network infrastructure in Nigeria. The company has a Market Capitalisation of $16.6 billion as of May 2017 with over 19,989 employees.

The company said in the third quarter ended September 2017 that, ‘’MTN Nigeria continued to deliver healthy revenue growth of 11,2%, supported by 5,4% growth in voice revenue and 72,1% growth indata revenue. Voice revenue growth was driven by effective price optimisation, increased minutes of use and higher interconnect revenue’’,

Though investors will swoop on the MTN shares when it is listed as many industry analysts believe, what may work to the company’s advantage is the recent record performance.

With a record performance of N453.1 billion Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in its just released 2018 Full Year Report, MTN Nigeria is certainly looking poised to increase its growth trajectory ahead of its projected listing on the Nigerian bourse in the weeks ahead, and going forward, perhaps on an even more sustainable basis in future.

To its credit, the company achieved this record performance despite the challenges it has had with the Nigerian Government which almost snuffed life out of the giant telecoms firm that doubles as the biggest of its type on the African continent. Also salutary is the fact that the communications company also attracted an additional six million subscribers to its network in the same year under review.

Revealing news of this, MTN said that the six million subscribers had now brought the total number of subscribers in its network to 58 million, adding that the 2018 EBITDA equally represented a 30.8 per cent profit growth. Breaking down the numbers, the report revealed that its services revenue increased by 17.2 per cent, data revenue increased by 39.3 per cent, digital revenue decreased by 58.1 per cent and Fintech revenue increased by 32.7 per cent.

It also showed an EBITDA margin increase by 4.5 per cent to a total 43.6 per cent (excluding CBN payment). The company’s bullish score card is already creating excitement on Marina and Broad streets of Lagos. Many stakeholders believe the company has in fact scored a great point that will play a role in attracting investors to it when it eventually lists this year 2019. With above sterling performance, shareholders are anxious and eager to be part owners of the company.

National Co-ordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie said that MTN’s listing on the NSE will work in the interest of the company and all stakeholders in the Nigerian economy. Mr.Okezie said the conversion from a private firm to a public firm of MTN was an indication that the giant telecoms company would list for real this time around as that singular action shows that the process of listing has started.

Mr. Olisa Egbunike, a financial analyst argues that there was no obstacle preventing MTN from listing aside economic uncertainty and the rate of oscillation of the naira. According to him, the company has earned the trust of Nigerians with its consistency. This, he said could encourage it to list its shares on NSE any time soon.

‘’The decision to list its shares depends on the management of the company’’, he concluded. MTN has invested over $18billion in Nigeria and is reported to have paid over $2billion in taxes and levies since it began operations in Nigeria. MTN has also resolved with the CBN on the issue of fine over the CCI transfers

Mr. Sewa Wusu, Head, Research & Investment Advisory at Sterling Capital told BusinessHallmark 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.

Group Managing Director, Afrinvest, Mr. Ike Chioke told BusinessHallmark that the listing of MTN was good and would boost the capital market. He explained that if MTN’s valuation which may be bigger than Dangote Cement combines with the later (that is Dangote Cement) may take half of the market capitalization given that Dangote Cement is already accounts for a quarter of the market capitalisation at NSE.

The CBN had ordered MTN and its lenders to bring back $8.1billion it alleged the company had illegally repatriated using improperly issued paper work between 2007 and 2008.

“MTN plans to list by introduction on The Nigerian Stock Exchange during the third quarter of 2019 and is looking to simplify the capital structure ahead of this listing,” MTN had said.

Almost every stakeholder in the capital market appears expectant, though not as excited as they were in the failed, first and second times the speculation about its listing slipped to the public.

“The Company’s listing on the Exchange will create a new telecoms asset class for investors and provide an opportunity for a wider group of Nigerians to participate in our investment story.

“This will be achieved via a listing by introduction and will be followed by a public offer once market conditions are conducive. Over time, and subject to market conditions, we anticipate that the participation of Nigerians in the ownership of the business will increase from around 20% to 35%.”

Chief Executive officer, NSE, Mr. Oscar Onyema had during the World Economic Forum early this year stated that he was optimistic that MTN’s listing would not only catalyse action in the market, but also affect the equities market community positively.

“MTN listing will have a significant positive impact on the market. It will give investors something new and exciting to participate in. It will give their subscribers an opportunity to take an ownership stake in the company, and, therefore, continue to do business with them. We (NSE) continue to engage with them (MTN) and to have conversations around the listing potentials. It is something that they believe they want to do; they’ve publicly stated that they want to do it”.

MTN is the biggest telecom company in Nigeria, competing with the likes of GLO and 9Moble.  The Nigerian capital market had attained unprecedented level at N16.080 trillion as at Wednesday January 17, 2018.

Ever since the market capitalisation has continued to slide closing at N10.979 trillion on Friday May 3, 2019. The bearish trend has been frightening to investors for some time now given the weak economy. However, industry analysts believe that listing MTN will make waves in the market any day as eager investors are waiting. This year alone the market has lost 7 .06 % while plunging by -23% year on year.

 

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