MTN to boost stock market liquidity by N375bn

[Edoman]

MTN to boost stock market liquidity by N375bn

6 July 2021




File copy: MTN

The move by the MTN Group to offer 14 per cent of its 78.8 per cent sshares in MTN Nigeria to Nigerians will boost its stock market liquidity by N375bn, analysis of data has shown.

The company recently said through its Group President and Chief Executive Officer, Ralph Mupita, that the group planned to sell14 per cent of MTN Nigeria to Nigerian investors.

Mupita had said, “MTN Nigeria, in which MTN Group has a 78.8 per cent stake, sought to have the largest retail shareholder base on the Nigerian Stock Exchange, where it has a market capitalisation of N3.4tn ($8.2bn).”

Also, speaking on CNBC AFRICA, CEO, MTN Nigeria, Karl Toriola, said, “In the short-medium term, MTN Group would like to sell about 14 per cent of its stake in MTN Nigeria, with the focus primarily on retail investors.

“Our plan is to have the largest base of Nigerian retail investors. We are hoping for a number and without committing to the market precisely because it depends on the uptake but we think there is significant enactment about this.

“Our plan is to have about two million retail investors, and make it the most widely held company on the stock exchange.

“We are hoping to move forward with that in the short to medium term; we are very excited about the participation of Nigerians in the value creation in MTN and in the industry.”

It wasn’t until 2019 that MTN was forced to join the Nigerian Stock Exchange after it began to have run-ins with the Nigerian government.

Since then, only limited shares of the company had been traded on the local bourse.

Stockbroker and economy analyst, Rotimi Fakayejo, said the move will help boost the number of MTN’s share in the market.

He said, “For the exchange, it means more liquidity. Their stocks become more active, and also, exchanging shares between investors becomes much easier.

“Now large chunks of their shares are held by other corporate investors, or institutional investors. If that be the case, they may not be the kind of investors that sell every now and then, but with share issues becoming more widespread, I mean among many investors, then it means more liquidity.

“In terms of price stability, it may swing both ways. If you look at a stock like Nestle, the number of shareholders is not as many as several others. And the number of shares is marginal; it is less than a billion.

“With MTN trying to have more of their shares in the hands of many investors, it will affect the stability of the price of that stock.”

Fakayejo believes this move would help the company also attain some sort of localisation.

He said, “There is a percentage of shares that ought to be held by retail investors and if such is not met, then it means a whole lot of things are going to be wrong between the company and its regulator.

“But if it is offer for sale, if it is existing shareholders that are selling, they are the ones that would benefit from the sales. It won’t add value to the company. We can’t ascertain what they want to do, until they do it.”

Senior Manager, External Relations, at MTN, Funso Aina, told our correspondent that the 4 per cent share sale would be a public offer.

The current President, Association of Telecommunications Companies of Nigeria, Ikechukwu Nnamani, said the public offer would give Nigerians the opportunity to directly benefit from the future success of the company.

Former President of the Association of Telecommunications Companies of Nigeria, Olusola Teniola, said the new move would put the shares of the company in the hands of many more people.

He said, “MTN had to list on the stock exchange as part of the settlement of the fine. And that is an ongoing process, which started two years ago.

“Now, there is only been a limited number of its shares that has been available to the public.

President, Association of Licensed Telecom Operators of Nigeria, Gbenga Adebayo, said, “It’s a business decision that they made and we hope this would be to the benefit of willing Nigerian’s investors and in further support of our economy.”

The National Coordinator, Progressive Shareholders Association of Nigeria, Boniface Okezie, said the move would ensure that the interest of Nigerians was served by the company.