MTN Group plans to sell 575m shares to Nigerian investors

MTN Group, the parent company of Nigeria’s telecom giant, MTN Nigeria, which controls 40 per cent market share, has concluded plans to sell 575 million units of its ordinary shares in MTN Nigeria to investors in the local market.

It broke the news this morning, Thursday 04 November 2021.

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In a letter to the Nigeria Exchange, MTN Nigeria Communications Plc, said the public offer for sale will be by way of a bookbuild to institutional investors and fixed price to retail investors.

“The offer is anticipated to open in November 2021 with a bookbuild to institutional investors after which a fixed price is expected to be announced for retail investors also in November 2021,” MTN said, adding that it is expected to close in December 2021.

“This is the first step in MTN Group’s previously communicated statement of intent to sell down approximately 14% of its current shareholding in MTN Nigeria,” it said, even as the 575 million units expected to be on offer this month represent 3.7 per cent of the company’s shares outstanding.

Market analysts believe that this move by the telecommunications giant is a part of its stance to further democratise the company, with more Nigerian shareholders, a position mainly influenced by the Nigeria Communications Commission’s fine imposed on the company about six years ago.

Since the penalty, MTN Group has not only reviewed its ownership stake in its Nigerian operation with the listing, it has also changed its financing strategy, with increased financing from the domestic debt market, through the use of commercial papers and Bonds.

This may be a strategy aimed at deepening public sentiment and hopefully mitigating the exposure of the MTN Group to future fiscal events in Nigeria, as the company may now be seen as being owned by Nigerians, market analysts say.

Some of them also believe that as MTN continues to widen its shareholder base in Nigeria, it may consider an employee share option plan for MTN Nigeria, in line with the Group’s practice.

As of the end of 2020, some 0.5% of MTN Group’s shares listed on the Johannesburg Stock Exchange are attributable to staff under the Employee Share Ownership Plan and Performance Share Plan.

In June 2016, MTN Group got a forbearance from the Nigerian government to pay a discounted N330 billion in lieu of its N1.03 trillion fine it levied on the telecom giant in October 2015 due to the failure of the company to disconnect subscribers whose SIM cards were not registered.

As a part of the negotiation, MTN committed to listing its ordinary shares publicly on the Nigerian Exchange, a commitment it fulfilled through the listing by the introduction of 20.4 billion units of the ordinary shares of MTN Nigeria Plc at the price of N90.00 per share in May 2019.

The shares have since rallied 95.1 per cent to N175.60 as at Wednesday 03 November 2021, a rally which is partly driven by the performance of the company and the limited float of the stock on the Nigerian Exchange.

Based on the company’s disclosure as at December 2020, 92 per cent of the shares of MTN Nigeria was closely held by 13 shareholders, including the parent company which owns 76.8 per cent in the Nigerian subsidiary through MTN International (Mauritius) Limited, leaving barely 8.01 per cent of the company as float available for trading on the NGX and belonging to 8,349 institutional and retail shareholders.