MTN Nigeria stock jumps after listing

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MTN Nigeria Communications Plc began trading on the Nigerian Stock Exchange on 16 May.
MTN Nigeria Communications Plc began trading on the Nigerian Stock Exchange on 16 May.

MTN Nigeria made a big splash yesterday, when it finally listed on the Nigerian Stock Exchange.

It took just 16 minutes for the group's stock to jump 10% to 99 naira, from the listing price of 90 naira, which is the maximum possible move under Nigerian Stock Exchange rules, according to Bloomberg.

That values the telco at about two trillion naira ($5.6 billion), making MTN Nigeria the second-biggest company on the NSE, after Dangote Cement and pushing Nestle Nigeria into third place.

The company's stock only traded for a short time on the bourse because a lengthy ceremony and speeches reportedly delayed the start of trade to 2:14pm local time, leaving only a brief window before the market closed for the day at 2:30pm.

The telco's stock on the Johannesburg Stock Exchange (JSE) ticked up 1.14% yesterday on the back of the Nigeria listing, closing trade at R100.65 per share.

The listing of MTN Nigeria Communications Plc also helped the Nigerian All-Share index to close on a slight gain yesterday. Nigerian stocks have been struggling lately and are down 9.5% this year, according to Bloomberg data. They were on track for their ninth straight day of losses until MTN Nigeria's shares began trading and the All-Share closed up 0.5%, its best performance in almost a month.

The MTN group owns almost 79% of the Nigerian business and has been planning to list the Nigerian operation on the Lagos stock exchange for almost three years. It is now doing so in two parts, the first of which took place yesterday to allow existing Nigerian investors, who previously traded over-the-counter, to now trade publicly on the NSE.

At a still unknown future date, MTN will also sell more shares to the public, as it reportedly looks to increase local ownership of MTN Nigeria from just over 19% currently, to around 35%.

However, first the company needs to sort out a $2 billion tax row with Nigeria's attorney general, which according to Reuters, is delaying a further sale of shares and a public offering. A court case between MTN and the attorney general over the matter was first scheduled for 8 November 2018 but has since been postponed a number of times and is now set for 26 June.

The Central Bank of Nigeria in August 2018 demanded MTN repatriate $8.1 billion to Nigeria, which the bank said the company had sent abroad in breach of foreign exchange regulations, which MTN denied. In December 2018, MTN agreed to make an almost $53 million payment to resolve the dispute, without admission of liability.

MTN Nigeria accounts for a third of the Johannesburg-based group's core profit and the telco had 60.3 million subscribers in Nigeria at the end of March 2019. The telco recently announced its earnings for the first quarter of 2019, recording 13.4% growth in service revenue in Nigeria and a 32.4% increase in data revenue.

Back in 2016, the mobile giant promised to make a secondary listing on the NSE as soon as it was commercially and legally possible as part of a 330 billion naira fine settlement arrangement with the Federal Government of Nigeria. The settlement came after MTN was slapped with a 1.04 trillion naira fine by the Nigerian Communication Commission in October 2015 for failing to meet a deadline to disconnect 5.1 million unregistered SIM cards in Nigeria.

MTN's primary listing is in South Africa on the JSE, and in May 2018 it also floated a 35% stake in its Ghanaian business on the Ghana Stock Exchange.

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