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Rivals panic as MTN plans NSE listing

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mtn, Phuthuma-Nhleko

By Olanrewaju Oyedeji

 

The move by Africa’s leading telecommunication’s player, MTN to list on the trading floor of the Nigerian Stock Exchange (NSE) is sending shivers down the spines of its rivals in the sector.

Though the call to list on the NSE had repeatedly been rejected in the past by MTN and other telecommunications players in the world’s fastest growing telecommunications market, it has now become quite attractive after MTN reportedly conceded to it as part of a settlement with the Nigerian Communications Commission (NCC).

Analysts say that the company’s listing would not only avail it of access to the cheaper funds that it would be sourcing from the bourse through public offers and shares trading, it would also put it in the good books of the Nigerian federal government, regulators, the National Assembly and general public that have since continued to demand the listing of telcos on the exchange to help deepen business at the exchange and further stimulate greater economic growth in the nation.

The move is therefore expect to trigger a similar rethink on the part of other operators and thereby provoke a boosting of the overall value and trading volume at the exchange.

The NCC had fined NTN a massive $5.2bn in October last year, for missing a deadline to disconnect 5.1m unregistered subscribers on its network. The fine was later reduced to $3.9bn but as at now, MTN has finally agreed that it will pay $1.67bn, which translates eventually into about a third of the original fine sum.

Admitting that the fine issue was clearly a strong point in its decision, MTN Executive Chairman Phuthuma Nhleko said on Friday that the agreement was accelerating its existing plans of listing the company but would do so “as soon as commercially and legally possible.”

He, however, assured shareholders that the company would not lose control of the Nigerian subsidiary when the company is listed on the NSE.

Alluding to stakeholders comments and reactions, Nhleko who has also been forced to announce plans to appoint a new Group CEO for MTN in the next few weeks said that fine, which is expected to be settled over three years, would be paid through MTN Nigeria’s cash flows and not by the group’s. MTN operates in 22 countries.

“MTN Nigeria is capable under its own balance sheet to pay the fine. The group balance sheet won’t come to play in terms of servicing the fine,” he said.

Reacting to the subject, a market watcher, Momentum SP Reid’s Sibonginkosi Nyanga said MTN Nigeria had a significant pile of cash. He said one of the positive aspects “is that the fine is denominated in Naira and with the depreciation of the Naira, this might end up being less in dollar terms.”

“We think it’s a decent settlement but a high price to pay for operational loopholes,” he said.

The fine controversy had resulted in the resignation of the firm’s erstwhile Group CEO Sifiso Dabengwa as well as its Nigeria operations CEO, Micheal Ikpo. Also axed in the process was its erstwhile Government Regulatory Affairs Officer in Nigeria, Wale Goodluck. Nhleko said the group was on track to appoint a new CEO with the announcement expected this month.

MTN has Etisalat, Airtel and Globacom as its core competitors in the Nigerian market.

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