MTN’s proposed listing on Nigeria’s bourse raises concerns

MTN Nigeria has announced on May 7 that it has registered to list 20.4 billion ordinary shares at 0.02 naira ($0.0001) each with the country’s securities regulator. This is part of the steps needed by MTN in order to list on the Nigerian Stock Exchange.

“I am excited we have achieved another milestone in our listing process and want to thank the SEC and the Corporate Affairs Commission (CAC) for supporting us through the process. We have now begun to engage with the Nigerian Stock Exchange (NSE) to complete the listing process,” MTN CEO, Ferdi Moolman, said while speaking on the announcement.

MTN listing on the Nigerian Stock Market will further deepen the market as it would help in diversifying concentration in the Market. This will also open doors for other companies to list on the market, a move which will see the Market becoming the largest bourse in Africa. The listing would also see MTN become the second largest listed company after Dangote Cement.

Although MTN listing on the bourse is a good thing for the stock market, there are concerns that the shares might not be sold to the public as stated in the media. Some Nigerians fear that these shares might even be bought by investment companies who will then sell it to the investors with lots of money as opposed to selling it to the general public.

It is worthy to note that the 30 percent that is being listed by MTN is more than the 20 percent free float required by the NSE from any company, which is aimed at preventing “undue concentration of securities in the hands of the core investors and related interests.”  If this rule is taken into consideration, it would mean that apart from availing the investing public the opportunity to take advantage of IPOs as means of wealth creation, it will also hinder the possibility of stock prices’ manipulation which can occur when securities are concentrated in the hands of a few investors.

In 2016, MTN Nigeria settled with Nigerian Communications Commission (NCC) to reduce the fine of N1.04 trillion to N330 billion. The punitive fine was imposed because of the company’s failure to disconnect subscribers who were not adequately registered despite numerous warnings by the regulatory body urging its compliance.

After much deliberation, the fine was significantly reduced with terms mandating the company to list its shares on the Nigerian Stock Exchange (NSE) and offer a formal apology to the government and the citizens within a month of executing the agreement. When the agreement was reached, the Minister of Communications, Adebayo Shittu, remarked that the settlement was in order to encourage investment in the country.

As a result of this fine by Nigeria, MTN’s biggest market, it recorded a loss of 445 cents per share in 2016, but in 2017 it recorded an increase in its profit.

The South African telecoms firm noted in a statement that it has started negotiations with the stock exchange to complete the listing.