BY SAMUEL MUNGADZE
JOHANNESBURG- Analysts have welcomed plans by MTN to offer initial public offerings (IPOs) in Ghana and Nigeria, saying it will assist in shoring up the company’s balance sheet.
Africa’s biggest mobile-phone company by subscribers is preparing to raise as much as $447 million through listing 35% of the subsidiary on the Ghana Stock Exchange in what will be the largest share sale in the country’s history.
Group president and CEO at MTN Rob Shuter, said public offering of the company’s stock in both countries remains high on the agenda during 2018, even though there is no guarantee of wider interest from the public.
Shuter spoke during presenting financial results for the year ended December 2017. He said MTN Nigeria continues to make good progress with the preparations for its listing on the Nigerian Stock Exchange.
“Extensive local marketing to target Nigerian investors is planned as part of a retail offer and institutional bookbuild, which may also involve selected international institutions,” said Shuter.
He also said MTN Ghana was moving forward with its localisation and we expect this process to be completed in the first half of 2018. Under the terms of its 4G licence, MTN Ghana is required to introduce Ghanaian investors as shareholders.
Analysts were positive that the Ghana and Nigeria IPOs will bring good news for MTN.
One analyst, Farai Mapfinya said operationally, he thinks it will have a material impact.
“What it does is give the company semi-local identity, which will aid in relationships with local, regulators, suppliers and to an extent the customers. It will also assist in shoring up the company’s balance sheet,” Mapfinya said.
Peter Takaendesa, portfolio manager at Mergence Investment Managers, the positive thing about the listing is that MTN may attract good valuation and the “market will have a very good see through.”
Takaendesa said if the Ghana and Nigeria assets are not listed people may coming up with their own valuations, which may be very different, they undervalue the assets and they may overvalue them at times.
He said: “If the actual asset itself is listed then the market will have a sanity check. If they come out the trade at good value then that will obviously feed through to MTN as a see-through valuation for its operating country. “
Takaendesa believes that there is also a positive side in terms of cash which he said MTN use to reduce their gearing.
The plans on the two West African IPOs come on the back of plans by MTN to review its assets to decide whether the company needs to have a footprint in all the 22 markets across Africa and the Middle East.
On Thursday, MTN reported a turn to net profit for 2017 due mainly to a Nigerian regulatory fine that it paid last year, and said it expects improved top-line and Ebitda growth over the medium term.
Africa’s telecoms giant made a net profit of R4.41 billion ($371.93 billion) for the year, compared with a loss of R2.61 billion when it booked a R10.5 billion Nigerian regulatory fine.