MTN Nigeria paints the NSE Y’ello, list 20.4bn shares by introduction

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Nigeria’s telecom giant – MTN Nigeria (MTNN) – is about to give the NSE a facelift with its proposed listing set to take place today. As such, investors are gearing up to take advantage of what seems to be one of the most interesting listings on the Exchange. By revenue, MTN is set to bear the flag of the highest revenue generating firm listed on the Exchange with its 12 months trailing revenue in excess of N1.0tn – ranking above Dangote Cement (N901.2bn) and Zenith Bank (N620.0bn).

The telco is bringing to the market 20.4bn units of shares at a listing price of N90.0/share according to local media reports. If the listing price turns out to be true, MTNN will add a N1.8tn to market capitalization, making the company the 2nd largest entity on the Nigerian Bourse. Again, MTNN’s listing will be the first of its kind in the Nigerian Telecom Industry by size and its arrival could spur the entry of other major players in the industry. Despite increasing interest by the investing community to take advantage of the historic listing, we note that liquidity could be a concern as the proposed listing by introduction implies that demand can only be filled by existing shareholder looking to exit. Additionally, snippets from recent releases suggest that free float may be pegged at 20.0%. However, management has hinted on a potential public offer which can buoy free float to c.35.0% subsequently.

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Looking at recent earnings, MTN annual ROE estimated to be well above 90% and has guided a dividend payout of 80%. Supported by Nigeria’s massive demographic appeal, increasing mobile phone penetration, and financial inclusion rates, we are of the view that a stake in the telco makes sense.

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