South Africa’s MTN to proceed with the listing of its Nigerian business

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MTN revealed it is still on track to list its Nigerian business, despite an ongoing dispute with authorities in Nigeria that has shaved off about 40 billion rand of its market capitalisation.

After it failed to disconnect unregistered Sim cards, the mobile operator agreed to a listing of its 79 percent stake in the Nigerian unit. However, new claims from Nigeria’s central bank and attorney general, worth a combined $10.1 billion cast doubt over those plans.

Nigeria’s demands have done little to help that country’s reputation as an attractive investment destination. The demands sent MTN’s shares crashing from 107.34 rand in late August to below 70 rand by mid-September 2018.

MTN CEO,  Rob Shuter said “MTN Nigeria’s plans to list have been challenged by the recent matters, however, MTN remains committed to the listing in Nigeria and work continues in this regard”.

According to Philip Short, portfolio manager of the Old Mutual Top Companies Fund, the listing is highly unlikely to happen until the dispute is resolved. He noted that MTN may be looking to list only a small portion of the Nigerian business, but the management would take a flexible approach to the listing.

Short said “one could argue for some sort of strategic rationale where you list a bit more of the business to get better buy-in from locals so that you don’t have the regulator pushing you around so much. But at the end of the day you want to retain as much ownership as possible”.

MTN, which revealed in a statement that it was certain no offences had been committed, said it added 2.5 million subscribers across all markets in the three months to end-September, taking its total customer base to 225.4 million.

The South African telecommunications firm also revealed that the service growth of 3 percent in South Africa was offset by stronger gains in Nigeria, Ghana and Iran. The service revenue in Nigeria rose by 17.4 percent.

In response to the rise in service revenue, Imtiaz Suliman, portfolio manager at Sentio Capital said “this shows that they are benefiting from 9Mobile being in disarray and they’re taking some market share, but the bigger elephant in the room is the impasse in Nigeria”.

Suliman concluded by saying that “I think the most likely case is the central bank asked for $8.1 billion but they’ll settle on something lower”.



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