Airtel listing to constitute 10 per cent market capitalisation

With Airtel set to list its shares on Friday, on the Nigerian Stock Exchange (NSE), analysts have said that the listing would constitute about 10 per cent of the market capitalisation after Dangote Cement, which has 21 per cent, and MTN with 18 per cent.

This is even as other telecommunications companies seeking funds have been urged to exploit the opportunities offered by the capital market.

Ahead of the July 5 listing, Airtel, which is the third largest operator with 45 million subscribers, and 26 per cent market share in Nigeria, will today, at the NSE, hold a pre-listing media interaction in Lagos.

Information from the listing prospectus showed that the bid price range between N363 and N375.53. The offer price (determined via Bookbuild) was at a range of N363 to N454 (80 to 100 pence). The number of shares offered at the lower price range was 674.406 million units, while at the top of the price range are 541.12 million units.

Speaking with The Guardian, yesterday, the Head of Research, FSL Securities Limited, Victor Chiazor, described Airtel Initial Public Offer (IPO) as a development that will bring investment options for equity investors, as it will take the market capitalisation to above N14 trillion.

Chiazor said although the offer is coming at a time the stock market is bearish; he however, noted that it will help deepen the market especially as it will be the third largest listed company behind MTN Nigeria, and Dangote Cement.

“With the book building process completed and the listing price set at N363, we expect the company to be listed on or before July 5, and unconditional dealing to commence. Hopefully, we expect the success of this Airtel IPO, and the listing by introduction done by MTN Nigeria, to spur interest from other companies to the huge benefits of listing on the Nigerian Stock Exchange.”

The Chief Research Officer, Investdata Consulting Limited, Ambrose Omodion, said Airtel Africa will boost the market capitalisation if listed on the Exchange as stated in its IPO document.

He noted that the telco’s corporate governance is expected to be in sync with international best practice since it plans to list first in the London Stock Exchange.

“Due to its dual listing, dividend is expected to be in dollars despite that there is no history of dividend payment.

Also, its operations in other Africa counties should support earnings if all things being equal,” he stated.

From his perspective, President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, Chatting with The Guardian, ATCON said the Association had predicted that MTN listing would act as a catalyst for other telcos to follow suit.

“Airtel’s move brings its shares onto both the LSE and NSE at the same time. This provides further dilution of heavyweights in the capital market, and provides an avenue for subscribers to purchase shares that will offer the market new sources of funds. It is a positive move by Airtel to consider offering its shares on the NSE, and I’m hopeful that with time other telcos seeking capital funds will exploit the opportunity presented.”

On the prospect of this development to the telecoms sector, Teniola noted that this will buoy telecom’s digital revolution, which requires new funding in addition to what the private sector has brought into the market.

This move, “further provides a potential funding base that will drive further CAPEX spending to achieve 70 per cent broadband penetration by 2024,” he stated.

While advising other operators to explore the NSE, he noted that the future is data, which is the new black gold, saying: “The fortunes of telcos will follow the past trends of the Oil & Gas industry that has benefitted greatly from the increase in shareholdership over many years. A capital intensive infrastructure project that usually characterises the telco eco-system is well-suited for a liquid capital market.

Other members of ATCON can take a leaf out of MTN and Airtel.”

On the planned share price of N363, Teniola said it is not too much, “this represents just about a shade over a dollar or circa 73 pence. In the long run, this could rise to be a N1,000 share. The beauty is to buy low if you can. I see many high net worth individuals and financial institutions buying blocks of thousand of multiples as an alternative investment vehicle.