Telecoms giant coming with a bullish identity
Agitations for multinationals in the telecoms, oil and gas companies to list on the nation’s bourse and encourage the active participation of indigenous consumers in the company’s wealth creation process have been on the front burner since after the 2007-2008 global financial crises.
Over the years, the nation’s stock market has played a fundamental role in enabling businesses raise capital, often looked upon as the most significant source for companies to raise additional financial capital for expansion by selling shares of ownership of the company in a public market.
Unfortunately, this basic function has increasingly come into question in the aftermath of the global financial crisis.
Analysts believe that the overall weak macroeconomic scenario, the sustained negative market sentiments witnessed in the market over the year, coupled with other factors such as falling oil prices, and the tension in the socio-political space, have not encouraged multinationals listing in the nation’s bourse.
Economists 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 N15 trillion.
Indeed, the Nigerian Stock Exchange (NSE) since 2012 have made efforts 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, sectorial analysis of the market shows that, the telecommunication sector is under-represented. It is even more disheartening that, none of the major national telecom company’s shares are traded on the NSE.
Against this backdrop, the Nigerian stock market still ranked below average in terms of volume of activities and contributions to GDP when compared to other emerging markets.
Interestingly, succor returned to the nation’s bourse last month as the telecoms giant, MTN announced plans to raise $500million from the sale of shares in its Nigerian business during the first half of this year.
The move is to enable the company in fulfilling the terms of a deal struck with the Nigeria, to settle a record fine imposed on it in 2016, over SIM registration default.
Stakeholders in the Nigerian capital market have described the moves as a ‘positive development’.
They said it would deepen the market, and encourage the active participation of individual consumers in the company’s wealth creation process
There is no gainsaying the fact that the listings of this telecom giant would ultimately shore up the liquidity of Nigerian capital market, which will in turn restore the much-needed investors’ confidence.
For instance, MTN has close to 50 per cent of the subscriber market in Nigeria. But its dominance is way deeper than that. Investigations revealed that MTN has more than 80 per cent of the revenues of all telecommunications companies in Nigeria. MTN Nigeria contributes about 5 percent of the nation’s GDP, with about 5000 employees in an emerging market where the lifespan of most businesses is 5 years. Revenue also increased from N793.6 billion in 2013 to N824.80 billion as at December 31, 2014, just as its subscriber base rose to 59.9 million whilst retaining the top spot in the 21 countries where the group operates.
The telecoms giant became a dominant operator in mobile voice and wholesale lease lines and transmission capacity, through hard work and aggressive marketing strategy, coupled with the advantage it got for taking a bold step to operate in the Nigerian telecoms market since 2001, when other operators feared to invest initially.
With over 55 million subscribers, MTN Nigeria Communications Limited (MTNN) provides cellular network access and ICT solutions to millions of Nigerians, connecting whole communities with each other and with the rest of the world. It is also the largest subsidiary in the MTN Group – a multinational telecommunications group offering world-class cellular network access and business solutions to over 210 million subscribers in 22 countries across Africa and the Middle East.
Since inception in 2001, MTNN has led the growth in the voice market to become the biggest mobile operator in Nigeria and West Africa. It is now pursuing new growth opportunities in the data and ICT space. This lead position is evident in a differentiated and attractive array of product and service offerings, as well as a growing bouquet of ICT products.
With numerous Service centres, connect stores and connect Points located in every state of the federation, MTN is poised to lead the delivery of a bold, new digital world to the Nigerian market.
The company has been on a consistent growth trajectory since inception. On February 9, 2001, the company secured one of four available licenses to operate digital GSM (Global System for Mobile Telecommunications) telephony from the Nigerian Communications Commission (NCC). A licence fee of US$285 million was paid for an initial 15 year period, allowing MTN Nigeria to provide and operate a 900 and 1800 MHz second-generation digital mobile service within Nigeria.
MTN Nigeria made the first call on its network on May 16, 2001. On March 19, 2007, MTN were also granted a 3G licence from the NCC, and later made a payment of $150 million before commencing 3G services in the same year.
It has consistently placed a high premium on network quality, customer service and value-added services which truly enrich customers’ lives since it commenced operations in August 2001.
Capital market analysts, operators, and Nigerian investors are full of expectations that the sign is a step towards the firms’ overdue listing, which market participants had anticipated in the past few years.
The Chief Executive Officer of Capital Bancorp Plc, Aigboje Higo, in a chat with The Guardian said:” the signs we get is that they are coming in the second quarter and it will be the biggest IPO in the history of the market and they will try and sell to as many investors as possible retail, institutional, domestic and foreign and global investors.
It will further put the Nigerian market in the world scale; it will give Nigerian another opportunity to invest in a company that has benefited so much from this country. The last one Seplat is in the oil and gas and this in the telecomms and it could also be the beginning for others to follow.
He continued: “If MTN is quoted, maybe it could join and be quoted. So it is something we are all looking forward to with excitement because it will change the landscape of the stock market for good and in the positive way.
“We need them because we need more equities, we need more securities, we need increased capitalisation, we want more activities in the stock market and we want more investors. As big as Nigeria is only five to seven million investors play the market. There coming will attract people that have never looked at the stock market.
The Head, Research and Strategy of Codros Capital Limited, Christian Orajekwe, , said it is a welcome development for the market because it is a company with strong values and fundamentals.
“More Nigerian investors would have the opportunity of participating on the company’s wealth creation. The company is known to be a profitable firm, and Nigerian investors would benefit from the capital appreciation and robust dividend that the company is bringing on the table.”
The President, Constant Shareholders Association, Shehu Mikail, said the listing would help deepen the market, while urging other telecom and oil firms to join the league.
“It is a very welcome development, it would deepen the market; it is to the advantage of operators. We expect other telecom as well as major oil companies, and power firms to join the train,” he added.
The Managing Director, High Cap Securities, David Adonri, said the shares, which are expected to be over-subscribed, will deepen the market if it is listed on the floor of the Nigerian Stock Exchange (NSE).
“It is positive for the market. It will deepen the capital market if they list eventually.it would help to stimulate other telecom and oil giant to be listed on the market.”
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