Stakeholders in the Nigerian capital market have said that the listing of a telecommunication company, MTN, on the Nigerian Stock Exchange will boost market capitalization and investors’ confidence in the market.
The Executive Chairman of the MTN group, Mr. Phuthuma Nhleko, said on Friday that the group has finalized with the Federal Government to list its local unit on the Nigerian Stock Exchange. Such a step had been on the firm’s radar but plans accelerated during negotiations over the fine.
The group has agreed to pay a reduced fine of N330 billion in a settlement with the Nigerian government of a long-running dispute over unregistered SIM cards, sending shares in the South African telecoms group soaring.
Reacting to MTN’s listing, the National Coordinator of the Independent Shareholders Association of Nigeria, ISAN, Mr. Sunny Nwosu, said the move by MTN is going to change a lot of things in the capital market.
He said, “People will be interested because it is a perishable investment which means that it is a cash cow but the fact is how much are they going to list.
“Will it be attractive to the retail investors? The reason was that they have done a private placement in the past which was not reachable to the retail or smallholder”.
He urged the company to ensure that the stock should be reachable to small investors because this will make people to buy and that when the offer comes, it should not be out of reach.
“Although, the capital market is for the capitalists but the more we are the merrier”, he added.
Nwosu said the listing will deepen capitalisation of the market and expose it to the international market as it then means that the profile of the market will move up a little bit and that will encourage other multinationals to come into the market.
A stockbroker, Mr. Matthew Ogagavouria, said the investing public will be thrilled to see shares of MTN listed on the floor of the Nigerian Stock Exchange, a development, he said, has been long overdue.
“It is good news to the market and it is also a commendable one. This will also give hope for better inclusion because as at today MTN is still sold at over the counter market and what it means is that only a few big boys with big pocket that will benefit from it as shareholders”.
He added that listing on NSE means that money making by stockbrokers will expand as they will now be able to trade MTN stocks on daily basis and make money in terms of commission.
“MTN will also be able to attract finance from the market to expand its business. It will become much stronger. It will support capital formation; it will also support wealth distribution and creation. Corporate governance issue will be improved and it will lead to more transparency in their operations and pay more in taxes to the government”, he added.
The President, Association of Telecommunications’ Companies of Nigeria, ATCON, Mr. Lanre Ajayi, said it is a good development as it would create more opportunities for Nigerians to be part owners of the company.
He believes that it is a wise decision on their part as it will increase the sympathy of Nigerians for the company. “Going by the latest fine incidence from the industry regulator, you will discover that Nigerians showed little or no sympathy to the company because there is no connection between them and the company”.
He noted that if MTN successfully lists on the NSE, it would motivate other telecom companies such as Globacom, Airtel, Etisalat and others to get listed on the local bourse.
The Director General of Securities and Exchange Commission, Mounir Gwarzo recently called on the Federal Government to mandate foreign companies like MTN, Multi-Choice to be listed on the floor of the NSE.
Appearing before the Senate Committee on Capital Market for his screening, he said the ball is in the court of the government to do the needful.
He told the Ayo Adeseun-led committee that the commission had done all within its powers to persuade foreign companies to be listed on the floor of the exchange but to no avail.
He opined that government can help by giving a condition that the companies that are listed in the stock exchange would be the first to be considered for contracts.
Gwarzo listed waivers and reduction of cost as incentives which could be used to motivate the companies to be listed on the nation’s stock exchange.
He also disclosed that an advisory council which would consist of high networth individuals would be set up to interface with the executive arm of government in this regard.
“We engaged the telecoms (firms) at a meeting and we said it is important for you to be listed. The only issue they raised was cost,” he added.
The group N330 billion fine will be paid by MTN Nigeria over three years and is only around a third of the $5.2 billion figure initially demanded by the west African country last October for failing to deactivate more than five million unregistered SIM cards.
The country has been cracking down on unregistered SIM cards, concerned they are used for criminal activity in a country fighting an insurgency by Islamist militant group Boko Haram.
MTN had threatened to pull out of Nigeria as paying the fine in full would have crippled its local operations, a government official said, asking not to be named.
“The present administration does not want to ground the operations of any investor in Nigeria,” Nhleko, the MTN group chairman said.
The Federal House of Representatives said it was surprised by the deal as its own probe into the MTN fine had not been concluded.
In March, the lower house launched an investigation, arguing that reducing the initial fine of $5.2 billion would require changing the law.
“We are still continuing with our investigation,” Fijabi Akinade, chairman of the House’s committee on communications, told Reuters. Lawmakers had summoned the Communications Minister and a top regulator official to discuss the deal today.
“We want to know how they arrived at that decision and if it was done in good faith … But honestly, we are surprised,” Akinade told Reuters.
The dispute removed a cloud hanging over MTN and its shares surged more than 20 per cent at one point and closed 13.18 percent higher at 140 rand. They had shed 22 percent since the fine was first announced.
“The relationship between MTN, the Federal Government of Nigeria and the Nigerian Communication Commission, NCC, has been restored and strengthened,” Nhleko said.
The NCC said the settlement was acceptable to both parties and that it had not been “out to kill MTN”.
“Money was not the issue here. The breach was the issue. I believe MTN has learned its lesson,” NCC spokesman Tony Ojobo told Reuters.