MTN’s Nigeria listing: View from the stock exchange floor in Lagos

Lagos — At exactly 2.30pm, when the stock market closed on Thursday, MTN Nigeria’s chairperson Pascal Dozie and Ferdi Moolman, MTN Nigeria’s CEO, excitedly clanged metal sticks on a gong on the crowded trade floor at the Nigerian Stock Exchange (NSE) building. The room, filled with brokers in their maroon jackets, erupted in celebration.

It is April 16 and South African telecoms giant, MTN has just made history as the first mobile telephone company to trade on the NSE.

The new MTN Nigeria Plc is putting up 20.33-billion shares valued at ₦90 (R3.56) per share. The listing will see the groups’ largest unit valued at $5-billion, putting it high on the list of firms trading on Nigerian markets.

Trade brokers in the Lagos exchange yelled their congratulations at each other. Yellow balloons flew on the trading floor, symbolizing the company’s yellow colours. “There’s cause to celebrate,” one NSE broker said.

Indeed, there is.

It has been years since a company valued at up to $5-billion listed on the NSE. A reputation of insider trading and a lack of transparency as well as major market crashes almost a decade ago means major corporations struggle to trust the NSE, industry experts say. When Nigerian retail giant Jumia went public recently, it chose to trade on the New York Stock Exchange instead.

READ MORE: Jumia, Africa’s e-unicorn?

MTN is now the second biggest Nigerian company listed on the stock market. Dangote Cement Plc owned by Aliko Dangote, Africa’s richest man, remains the biggest company listed in the Lagos House.

“The last time we had any major listings was in the early 2000s and it was the government that stimulated those listings,” says Ugo Obi-Chukwu, founder of leading financial literacy website, Nairametrics. “By listing MTN shares on the stock market, NSE market capitalisation has jumped by about ₦1.8-trillion and has opened the gated for more mega-corporations to list.”

MTN’s move to list the company on NSE’s premium board — an elite segment for major issuers on the exchange — is in a bid to allow local ownership in the company, according to official statements. But there’s more to that story. The company is having its first big break after a string of bad run-ins with the Nigerian government.

The NSE deal, for example, is part of an agreement MTN Nigeria reached with local authorities to sell down its majority 79% stake as settlement for a $5.2-billion regulatory fine after it failed to meet the deadline for sim card registrations in 2016.

The company’s shares were hammered last September after it was again slapped with a $2-billion dollar bill in back taxes by Nigeria’s attorney general. That event sent its stocks to plummet to an all-time low. Barely a week earlier, Nigeria’s central bank ordered it to pay back $8.1-billion – money it said MTN and its lenders illegally repatriated to its South African headquarters between 2007 and 2015.

Although the Thursday listing will value the company at $5-billion, the company says a true valuation of its worth is not possible because of its many disputes with the authorities.

Instead of an initial public offering (IPO) as anticipated, MTN Nigeria Plc is listing by way of introduction, meaning shareholders in the company can now trade on the NSE but without additional sales of shares. MTN officials remain cryptic about why the company has not yet made an initial public offering. “We were to have an IPO but due to unforeseen circumstances we couldn’t,” Dozie said on Thursday after the markets closed. “Half bread is better than none.”

IPO or not, the move is exciting for Nigeria’s stock markets, says Obi-Chukwu who is also a retail investor. “This will open the floodgates for more listings and possibly renew retain an interest in the stock market.”

Some of the new interest analysts hope MTN’s listing will attract is that of a younger population unfamiliar with stock markets, a population the MTN brand directly speaks to. That could happen if the NSE works hard at wooing more corporations like MTN to list and if it continues to be transparent in its dealings, says Obi-Chukwu.

MTN currently has the lion’s share of Nigeria’s mobile network users. And while the company listed first on the Ghana stock exchange last year, Nigeria remains the telecom giant’s biggest market. More than 60 million mobile phone users were registered under the company as of 2018, accounting for one-third of the company’s revenue.

There was speculation by analysts as to whether MTN was being targeted by local authorities because it is owned by foreign investors. The company has been caught in tensions between Nigeria and South Africa. In 2017, protesters attacked its Abuja offices after a wave of xenophobic attacks against Nigerians in South Africa. Group chairman Phuthuma Nhleko was in Abuja at the time.

Now that it has gone public in Nigeria, the regulatory onslaught is going to be less frequent, says Obi-Chukwu of Nairametrics. “Its financial statements are now known and there is nothing to hide.”

Despite facing big hurdles with local authorities and a two-year economic recession in the country, MTN isn’t slowing down and is set to launch its mobile money service later this year.

“That Nigerians partly own the company will make it difficult for the government to interfere as incessantly as it [did in the past years],” Obi-Chukwu says.

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Shola Lawal
Shola Lawal
Shola Lawal is a Nigeria-based freelance journalist and filmmaker covering social justice and environmental issues across west Africa.

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