Nigerian central bank moves to push banks to increase lending will be a damp squib, meaning an interest-rate cut is in prospect, says John Ashbourne, senior emerging markets economist at Capital Economics in London.
Nigeria’s MTN ready to list on NSE
All is now set for MTN, the country's largest mobile operator, to be listed on the Nigerian Stock Exchange in the second quarter of 2019.
Earlier this week, MTN announced its conversion from a private company to a public one: a significant step on the road to the planned listing.
The long road to the NSE
It’s been a long journey to listing for the South African group. The last 24 months have been spent fending off hefty fines from the Nigerian central bank and regulators in the telecom sector.
- In 2015, MTN was slapped with a $5.2bn fine by the Nigerian Communications Commission (NCC) for failure to deactivate 5.2 million SIMs not registered by customers. The fine was negotiated down to less than $1bn with the help of former US attorney-general Eric Holder. As part of the resolution, MTN was obliged to list locally.
- In 2018, MTN also was at the centre of a rift with the apex bank, which alleged that it had illegally repatriated $8.1bn from Nigeria and also owed tax arrears of $2.1bn. It made MTN mull over its planned IPO. “The IPO type of listing has become challenging under current market conditions,” chief financial officer Ralph Mupita said. “We are exploring other options. The Nigerian business would not get fair value under current market conditions.”
In an investor update call in February, CEO Rob Shuter explained that the listing would be the first phase. “We will in phase do be doing a project to increase the Nigerian participation in MTN Nigeria, targeting more a free float of around 35% than the free float we have today, which is around 20%.”
- Before then, MTN will continue to liaise with both the NSE and the Securities and Exchange Commission (SEC) to get all the Is dotted and Ts crossed.
Why does this matter?
For MTN, all’s well that ends well. It will effectively be the first trillion-naira firm listed on the NSE.
- The company’s revenue hit the N1trn mark in 2018, despite stock fluctuations due its riff with the NCC over absurd fines.
- A year-on-year increase has seen its revenue rise by 17% from N887 billion in 2017.
Having added almost 6 million new subscribers – 4.5 million of whom are active data customers – the group is in a good place to attract shareholders and even more subscribers after full listing.
- MTN also recently won a key four-year tussle for additional 800MHz spectrum from its 2015 acquisition of banking mogul Jim Ovia’s Visafone Communications.
Bottom line: If you thought the Jumia IPO was fun, watch the sparks fly when MTN lists in Lagos.