MTN coming with a bullish identity?

Indices plunge by N449 billion in six months
Stakeholders in the nation’s capital market have described the moves by the Telecom giant, MTN Nigeria to become a Public Liability Company (Plc) by listing its shares on the floor of the Nigerian Stock Exchange (NSE) as a ‘welcome development’, saying it would deepen the market and encourage the  active participation of indigenous consumers in the company’s wealth creation process.

The telecommunications firm, which controls about 39 per cent market share and currently services about 57 million customers in Nigeria, at the weekend, pledged to take immediate steps to ensure listing of its shares on the Nigerian Stock Exchange as soon as it is commercially and legally possible.

Indeed, there have been growing agitations for multinationals in the Telecoms, oil and gas companies to list on the nation’s bourse by way of public offer for purchase by interested members of the investing public.

Analysts have argued that compelling big corporations in niche sectors of the Nigerian economy, especially the telecommunications and oil and gas companies to list on the exchange will significantly raise the capitalisation of the stock market which is currently estimated at slightly above N9 trillion.

Specifically, market capitalisation of quoted equities which opened the year at N9,757 trillion as at January 4, 2016 now stand at N9, 308 trillion as at Monday, June 13, 2016 down by N449 billion or 4.8 per cent in six months, while the All-share index slides by 1266.9 points or 4.7 per cent from 28,370.32 to 27,103.38.

There is no gain-saying the fact that the listings of these telecom giants would ultimately shore up the liquidity of Nigerian capital market which will in turn restore the much-needed investors’ confidence.

Nonetheless, sectorial analysis of the market shows that, the telecommunication sector is under-represented. MTN, if listed would become the first major national telecom company shares to be traded on the NSE.

This is inspite of efforts made by the Nigerian Stock Exchange (NSE) since 2012 to roll out initiatives that will compel multinational firms to list on the Nigerian Stock Exchange.

Specifically, to engender a willingness to participate in the market, the listing rules of the exchange had been reviewed so as to make it easier for these companies to access the Nigerian capital market and eventually list their shares.

NSE had also provided a legislation that covers incentives, unbundling of stringent eligibility requirements that create high barriers for potential entrants and hinder participation by willing businesses, adopting of options that promote foreign investment in the economy under terms that support national interest without exposing the market to the dangers of the past.

Unfortunately, the nation’ capital market has recorded unprecedented lull due to volatile forex and macro-economic concerns. Foreign portfolio flows to emerging markets turn negative. Spillover effect from China and fall in commodity prices were responsible for poor global equities market performance. The market experienced sustained volatility as investors’ exited positions and speculators went bargain hunting.

This is in spite of strategies and strict regulatory framework and reforms introduced by the regulators to reposition the market for growth and development as well as increased the dividend yields of shares to investors in the last eight months.

The long reign of bears has become a cause for concern to both retail and foreign. For retail investors the continuous depreciation in stock prices has become a justification for their apathy to investing in the stock market.
The foreign investors which constitute about 50 percent of participants in the Nigerian stock market are holding on to their investments while a few of them with high risk appetite are simply engaged in speculative trading.

Reacting to the development, the President, Institute of Capital Market Registrars, Bayo Olugbemi who affirmed that the listing would deepen the market, urged other major telecom and oil firms to also join the league.

“It is a very much welcome development. It will deepen our market. We expect other telecom as well as major oil companies and power sector to join the train.”

Corroborating his view, the President, Renaissance Shareholders Association, Timothy Olufemi : “it is good for the NSE. It would deepen the market. It is to the advantage of the operators especially. Good luck to operators.

The Managing Director, Crane Securities Limited, Mike Eze also affirmed that the listing would help to help deepen the market.He added that it will also stimulate other telecoms participants for listing as it would trigger competition in the sector.

“The indication by MTN that they intend to get listed is a sign of one of the long overdue listings that the market has anticipated but they kept dilly dallying.

First, it is going to help deepen the market. Secondly, it will help to stimulate the telecoms participants; airtel, glo, etisalat among others, to come to the stock market and be listed.

“ MTN being a market leader in that sector will help in pushing the rest of their competitors to come forward for listing. So this is a development that its welcome is more than anticipated. It is good for the market,” he said.