MTN unveils an offer of 3 percent of its shares in new Nigerian IPO
Telecommunications group is on track to reduce its holding company debt
MTN YESTERDAY unveiled a public offer of just under 3 percent of shares in MTN Nigeria, its biggest market, saying it was on track to reduce holding company debt, raising hopes of dividends after a two-year break.
MTN plans to sell up to 575 million shares in MTN Nigeria for R3.7bn (101.1 billion naira), as part of its focus to ‘further localise’ 14 percent of the group’s holding in MTN Nigeria over the short to medium term. The offer is expected to close next month.
“The offer is anticipated to open in November 2021 with a bookbuild to institutional investors after which a fixed price is expected to be announced for retail investors also in November 2021,” said MTN.
In July MTN announced plans to sell 14 percent of its MTN Nigeria shares on the Nigerian Stock Exchange in the short to medium term targeting retail investors in that country.
MTN Nigeria is Nigeria’s biggest telecoms with 67.5 million mobile subscribers. It lost 7.5 million mobile subscribers as a result of the SIM registration restrictions at the end of September.
Head of Equities at Mergence Investment Managers, Peter Takaendesa, said by selling shares to Nigerian investors, MTN was helping itself in the long run.
“The more local shareholders you have, the more lenient the regulators. Selling shares in Nigeria is the right thing to do. You will have less problems in the long run when locals are empowered,” said Takaendesa.
Takaendesa also said the public offering in Nigeria would reduce gearing as proceeds would be used towards debt repayment. Takaendesa believed the group was in a position to resume its dividend policy after prioritising repayment of US dollar borrowings.
“MTN has gone for 24 months without paying a dividend and coupled with proceeds from asset disposals and money received from the IHP initial public offering (IPO) this has helped to reduce its holding company (Holdco) net debt,” he said.
MTN said Holdco net debt was
reduced to R33.9bn at the end of the quarter ended September 2021.
MTN said it had reduced debt by using proceeds of its so-called “asset realisation programme” (ARP). Last month it led Africa’s biggest IPO when its subsidiary IHS Towers listed 18 million ordinary shares on the New York Stock Exchange.
The group now holds 85 176 719 ordinary shares in IHS Towers, which remains key to its ARP.
MTN is working on shifting the perception of being a foreign value extracting entity after several run-ins with regulators in that country.
In 2019 MTN listed MTN Nigeria on the Nigerian Stock Exchange as part of the settlement agreement with the Nigerian regulators after it was slapped with a record $5.2bn (R80bn) fine for unregistered SIM cards in 2015 although
the fine was subsequently reduced to $3.2bn.
MTN’s chief executive, Ralph Mupita, said: “Material progress was made in accelerating the deleveraging of the holding company balance sheet, and our asset realisation programme and portfolio optimisation priorities are progressing well. “The process of structurally separating our fintech and fibre assets remains on track.”
The group said its capex guidance for 2021 was R31.1bn, which comprised of higher spending driven by accelerated roll-out in MTN SA and MTN Nigeria to “capture growth opportunities from explosive data traffic that we are experiencing”.
MTN’s shares yesterday closed 6.71 percent higher on the JSE at R147.59.