MTN’s IPO – The Nation Nigeria

•A good development for the telecommunications giant

The local bourse has been abuzz over reports that the telecommunications giant, MTN Nigeria Limited, is finally set to offload some 30 per cent of its shares valued at about $500 million to Nigerian investors during the first half of the year. For a market that has, in recent times, been upbeat, it is welcome news.

Apart from helping to deepen the market, it promises a significant boost to its Nigerian operations through injection of additional capital from new shareholders. Coincidentally, the telecommunications company is also reported as preparing a similar offer on the Ghana Stock Exchange to raise $447 million this month to boost its operations in that country.

The difference, however, is that whereas the Ghana Initial Public Offer merely formalises part of the conditions for granting the company the 15-year license for the fourth-generation spectrum – which is that Ghanaian investors own 35 percent of the business – the Nigerian public offer comes as part of the final settlement in the aftermath of the hefty penalty imposed on the company for its failure to meet the deadline to deactivate 5.2 million unregistered subscribers on its network in 2015.

The National Communications Commission (NCC), citing Section 20(1) of Registration of Telephone Subscribers Regulations (TSR) 2011 had imposed a penalty of N200,000 for each unregistered but activated subscription medium, hence the initial fine of $5.2 billion. This was later reviewed downwards to $1 billion in June 2016 – in addition to mandatory listing.

Would the telecommunications firm have agreed to sell its shares on the Nigerian bourse without the recourse to sanction? The development has since rendered the question academic. However, that this is now a done deal is certainly saying a lot for an entity that has resisted all previous entreaties to get listed on the Nigeria Stock Exchange despite contributing about 40 per cent to the group’s profits. Nigerians therefore cannot wait to see the process proceed apace. Much as we expect to see MTN Nigeria demonstrate good faith through the entire process, we expect to see the capital market regulators – the Securities and Exchange Commission (SEC) and the NSE demonstrate a matching dexterity.

We must of course draw lesson from Ghana which insisted, ab initio, that a sizeable chunk of the shares be reserved for its citizen-investors. Unlike Ghana where the word seems to be that the citizens not only deserve a piece of the action with their officials going as far as incorporating the provision in the agreement for awarding the licence, here, our officials have been known to moan to no end about the unwillingness of multinationals to get listed on the local bourse. In the end, the local economy is not only worse for it in terms of the billions repatriated annually through transfers; the local bourse is denied a potential source of much vitality.

Although mandatory, nothing of course says that the listing cannot be win-win for all the parties – if successful. First is the huge capital to be raked in – funds considerably cheaper compared with other sources, to upgrade services. Second, is also the factor of goodwill to be generated, particularly for a firm hitherto perceived by Nigerians as a wholly foreign – albeit, South African entity.

Shedding the ‘foreign’ toga of an entity only interested in raking huge profits to the exclusion of the locals would certainly do the telecommunications firm a lot of good at this time. Moreover, for a company often accused – either rightly or wrongly – of sundry corporate infractions, the ensuing compliance with stock exchange rules on disclosure and corporate governance post-listing would certainly clear any lingering dark clouds over its activities.

In the long run, the bourse as indeed the economy as a whole can only be better for it.

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