Can MTN Nigeria change the political optics through its local listing?

MTN Nigeria’s listing on the local exchange is cautious but it promises much. It is a listing “by introduction” which means it is simply putting shares that were in the private realm onto a public market; there is no new issue of shares, there is no capital raising process and there is no placement process.

Consequently, it's unlikely to be dramatic and certainly doesn’t change in any significant way the shareholding base of the Nigerian company, or the group as a whole. But it's also common knowledge that the company would like to go further.

There are several ways it could do that, including a public offering not just of the Nigerian business but of the group as a whole. An MTN spokesperson Karen Byamugisha said MTN Group has also previously mentioned that it intends doing a public offering at a later stage “when market conditions are more conducive”. So this is probably only the first step. Ferdi Moolman, CEO of MTN Nigeria said: “this is just the beginning, we still intend to pursue a future Public Offer giving more Nigerians greater access to the MTN opportunity”.

What it does mean, however, is that shares in MTN Nigeria will be more easily tradable. MTN group owns 78.8% of the Nigerian company, while Nigerian investors own 19.4 of the company, leaving the remaining 1.8% in the hands of external investors.

There will be no direct link between the MTN Nigeria share price and the group share price; the local company will trade according to its own performance metrics. These would have been very good if it weren’t for the fact that the company keeps getting hit by regulatory fines most of which are dubiously founded.

In the latest quarter ending March 31, MTN Nigeria announced a 13.4% growth in service revenue and an additional 2.1 million active mobile subscribers. The company announced earnings before tax and variables were N150.4 billion (R6-billion) on a margin of 53.3%. The commencement listing price was set at N90 per ordinary share determined by referencing private sale transactions by shareholders over the past 180 business days. But the true valuation is uncertain because of Nigeria’s Attorney General claim for $2 billion in back taxes.

But in a sense, the numbers are secondary. MTN would normally prefer to hold on to as much of the cash flow and earnings it could, so the listing is effectively a concession to Nigerian popular opinion and an effort to “internalise” the business. And that raises the question of whether it will work.

In his public announcement, Moolman laid on the compliments with a trowel. “We appreciate the continued support afforded us by the government, regulators and people of this great nation”.

Vestact fund manager Paul Theron said the company was being encouraged to list by Nigerian authorities, and the listing could be a “point of leverage” so the company would not be seen as representing money-grubbing South Africans.

It could also be good for SA shareholders by demonstrating that there was “some unrealised value under the hood”.

But will it be enough to change perceptions? It’s too early to tell.