MTN’s proposed public offer, As Nigerians anxiously awaits…

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The MTN Nigeria may have made headway in its plans to restructure its debts and fund local investments in Nigeria with its local currency after the Securities and Exchange Commission finally approved its bid to be listed on the Nigerian Stock Exchange, after many weeks of delay.

This comes about two years after the Nigerian Communications Commission requested that the company must agree to list its shares on the NSE before its fine would be reduced significantly. With this development, MTN Nigeria’s Initial Public Offering has been set for August 2018, with top industry players disclosing to our correspondent that MTN Nigeria might be worth about N3.9tn (($10.88bn) on the NSE.

According to report, “MTN hopes to raise $400m from the IPO to pay preference shareholders.” The telecoms company would issue about 402 million shares, with one share split into 50 units to create 20 billion shares. With this, the company will be able to set the IPO price through book building.

It would be recalled that MTN had originally planned to list its Nigerian office on the country’s stock exchange last year but delayed the decision due to unfavourable market conditions.

A source at MTN Nigeria said, “Although we are not certain that the IPO will hold in August, what is realistic is that the revenue from this IPO will be used by MTN to pay up its debt, redeem preference shares issued to existing investors who bought the shares 11 years ago. It will also help in reducing the company’s exposure to the dollar.”

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The source added, “This listing will certainly hold in the third quarter of the year, may be September, because we would not want it to get into the fourth quarter when the country will be experiencing electioneering.

“Whenever it holds, it will obviously be MTN’s major listing in West Africa after successfully listing in Ghana in May. It also plans to list in Ivory Coast.”

Meanwhile, there might be a cog in the wheel towards achieving this after a management source at the Security and Exchange Commission stated on Friday that “MTN Nigeria has not filled the necessary papers for the long-awaited IPO.”

Although the MTN Group’s President/Chief Executive Officer, Rob Shuter, said, “The IPO will happen before the end of 2018 when we would signed all the necessary papers and fulfilled the demands for electronic listing,” there are concerns that the shares may not be sold to the public as stated in certain quarters.

Some Nigerians fear that these shares may even be bought by investment companies that will then sell it to investors with a lot of money as opposed to selling it to the public. But it is worthy to note that the 30 per cent that is being listed by MTN is more than the 20 per cent free float required by the NSE from any company. She said the 20 per cent free float rule by the NSE was aimed at preventing ‘undue concentration of securities in the hands of the core investors and related interests’.

If this rule were taken into consideration, it would mean that apart from availing the investing public the opportunity to take advantage of the IPOs as a means of wealth creation, it would also hinder the possibility of stock prices’ manipulation, which can occur when securities are concentrated in the hands of a few investors.

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MTN Nigeria is Nigeria’s biggest telecommunications provider with more than 50 million subscribers. In 2015, for failing to disconnect unregistered subscribers on its network before a general deadline, the NCC slapped it with a $1bn fine. Due to series of interventions, the fine was later reduced to N330bn. The fine contributed to MTN’s debt burden, which had risen from R52bn ($4.2bn) in 2016 to R57bN ($4.6bN) in 2017.

In response, MTN, whose headquarters is situated in South Africa, decided to replace its dollar-dominated debts with the local currencies of the countries where its different units are situated.

The stock exchange listing of its Nigerian office is MTN’s second major listing in its West African offices this year after the Ghana IPO in May. The listing of the IPO, which was worth $754m, was bigger than Ghana’s previous greatest share sale. The IPO was offered at 4.64 billion shares in the unit.

It has also announced the same deal in Ivory Coast. However, in its offices in Iran, representing its second largest market, it has been impossible for MTN to repatriate about E200m ($237m) after the United States President, Donald Trump, pulled out of a nuclear deal with the country and reinstated sanctions on it.

“MTN has appointed Nigerian investment firm Chapel Hill Denham as lead issuing house for the IPO, while South Africa’s Rand Merchant Bank, Renaissance Capital, and Vetiva Capital were picked as joint issuers. These banks and brokers will work with global co-coordinators, Citigroup Inc. and Standard Bank Group Ltd,” a statement on MTN’s website read.

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