MTN may no longer launch an Initial Public Offering (IPO) in Nigeria as recent events make it increasingly difficult for Africa’s largest telecoms operator to make good on its agreement with Nigerian regulators.
The South Africa headquartered telco had agreed to an IPO that will see its shares listed on the Nigerian Stock Exchange (NSE) as part of settlement of a $1 billion fine imposed on the company for failing to disconnect unregistered SIM cards before a deadline set by regulators. However, a $2 billion back taxes claim by the attorney general’s office barely a week after the central bank asked MTN to return $8.1 billion that was claimed the telco illegally moved out of the country, complicated issues and raised doubts about the IPO.
Following the $2 billion claim, MTN Group CEO Rob Shuter had declared that MTN’s Nigerian IPO was always going to be dependent on market conditions and “current market conditions” have made “the IPO type of listing” challenging, according to Bloomberg. The company may now be looking at other options, including listing by introduction.
There are several ways through which MTN can list on the NSE. Apart from IPO, which allows the general public to subscribe to a company’s shares in the primary market, and listing by introduction, through which a company’s shares are listed without a prior IPO, having already raised capital prior to applying to list, the telecoms company can also opt for dual listing, an option available to companies already listed on another stock exchange. As things stand, listing by introduction seem the best option for MTN if it decides against an IPO. Chief Financial Officer Ralph Mupita agreed as much in an interview with Bloomberg.
Already, the company has raised capital — securing a N200 billion ($553.5 million) loan from 12 Nigerian banks in August. But it also has to meet other listing requirements for listing by introduction – including a minimum of 300 public shareholders to list on the Main Board, as well as a minimum public float of 20 percent.
MTN has at different times reiterated its commitment to Nigeria, its most prolific market despite issues with the authorities. It has continued to engage authorities over the matter with the hope of a speedy resolution. The telco only recently completed its IPO in Ghana, which in 2015 added listing shares on the Ghana Stock Exchange as part of the terms of a 4G licence in the 800 MHz spectrum.
The company’s shares sold at R89.68 (4:49 PM SAST) on the Johannesburg Stock Exchange on Tuesday as it continues its recovery after issues in Nigeria made the company lose more than 20 percent of its value.