High demand for MTN in Ghana

A record wave of stock is heading for Ghana’s market as MTN prepares to sell a chunk of its local unit to investors for an expected $790m. The shares should be snapped up, the country’s secondlargest money manager said.

A record wave of stock is heading for Ghana’s market as MTN prepares to sell a chunk of its local unit to investors for an expected $790m. The shares should be snapped up, the country’s second-largest money manager said.

The numbers are striking: the planned listing would be more than 10 times bigger than the country’s largest initial public offering (IPO) to date. Even so, demand from foreign investors attracted by MTN’s profitability should ensure the IPO was a success, said Alex Boahen, head of research at Databank Group.

“The offer will generate a lot of global interest,” he said in the capital, Accra.

“If you see the numbers, it’s a very profitable company. MTN has a dominant market position and a lot of investors will like to get a piece of the fast-growing telecom sector.”

MTN’s Ghana unit increased the target for its IPO by more than a half to 3.48-billion cedis ($788m), people familiar with the matter said last week.

The listing of a 35% stake is a step towards fulfilling conditions MTN agreed to with the government in 2015 when the Johannesburg-based firm won the right to use fourth-generation spectrum, a high-speed mobile data service for customers.

Boahen said that he expected foreign companies and funds with emerging market or panAfrican strategies to buy the bulk of the MTN shares. Local private pension funds and other institutional investors might also take big positions.

Although individual Ghanaians would be keen to pick up some of the stock, their lack of available cash meant many would miss out, he said.

MTN entered the Ghanaian market in 2006 and now had 17.8-million cellphone subscribers, a 55% share of the market, regional CEO Ebenezer Asante said on March 13. Its mobile money service has grown to 11.6-million customers in 2017, from 2-million in 2012.

Ghana’s record IPO to date was Agricultural Development Bank, which raised 326-million cedis in December 2016.

The size of the MTN offering would boost liquidity in the local equities market, along with raising its profile and adding a new sector to attract investors, said Kofi Yamoah, MD of the exchange in Ghana.

IF YOU SEE THE NUMBERS, IT’S A VERY PROFITABLE COMPANY. MTN HAS A DOMINANT MARKET POSITION