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MTN’s $280m share offer to NGX investors

SHARE OFFER ALERT – A top Nigerian telco is offering shares to investors as its parent continues a giant capital-raise. South Africa’s MTN Group Ltd is holding book-build discussions with institutional investors before launching an offer of shares in NGX-listed MTN Nigeria Communications PLC later this month (November).

Company Secretary Uto Ukpanah in an MTN share offer announcement wrote on 4 November: “MTN Group has announced its intention to proceed with a public offer for sale of up to 575 million shares in MTN Nigeria by way of a bookbuild to institutional investors and fixed price to retail investors. “

As the market digests the news and buoyed by the Central Bank of Nigeria’s approval in principle for it to offer its mobile money service MoMo (see this Reuters report), the MTN Nigeria share price climbed 9% from NGN 175.60 on 5 November and by 11 November closed at NGN 200. That would value the capital raise at NGN 115bn ($280m). Once the offer price is fixed, the offer is expected to open to retail investors on the Nigerian Exchange (NGX). The offer is to close in December.

MTN Nigeria says it connects some 68m people and crowns itself Nigeria’s leading telco in coverage, capacity and innovation.

MTN focusing to compete as Africa telecoms race speeds up

The share offer is a step in a plan by MTN Group, listed on the JSE, to sell down some 14% of its current shareholding in MTN Nigeria. This interesting article by Kalu Aja on Nairametrics gives more background on MTN’s restructuring. “The telco’s public offer is in line with its Asset Realization and Portfolio transformation Program (ARP).

“MTN plans to sell down its shareholding in MTN Nigeria from the current 76% to 62%. It has concluded a similar “localization” in Zambia, selling 8% to the local market. The company intends to sell 12.5% of its holding in MTN Ghana and offer its shares in MTN Rwanda. They have sold holdings in their cell tower business in Ghana and Rwanda. They are also exiting their IHS Tower holdings which own cell tower assets in Nigeria. MTN has also diverted from Jumia Technologies AG, netting R2.3bn ($138 million). In terms of divestment, however, MTN is exiting the Middle East entirely and has put up its 75% stake for sale.”

We covered the MTN cash raise from selling part-shareholdings including from the initial public offering IPO of $7bn towers firm IHS in New York – see our story on the IHS share offer – where it had owned 29% of the company before the offer. The share offer of 20% of MTN’s shares in MTN Uganda, the biggest telco in that market by subscribers, opened 11 Uganda and will close on 22 November as reported in our post on the share offer . It is expected to raise $280m for the parent.

The Nairametrics article goes into more depth on MTN’s battle to reduce is giant debt burden and reduce its risks in Nigeria, including difficulties getting out cash. “The ARP objective is to reduce debt, simplify the portfolio, reduce risk, and improve returns. MTN plans to raise at least R25 billion over 3 to 5 years.” The article also gives some hints as to whether an investment in MTN Nigeria shares might be good.

Investments in telecommunications infrastructure in Africa are ramping up fast as leading telcos race for share of a fast growing telecommunications market, which has been rewarding investors handsomely for decades. MTN has listed its local subsidiaries in Nigeria, Rwanda and Ghana.

Bloomberg estimated that MTN would raise R11bn through the sale and leaseback of its South African towers during September. UPDATE 17 NOVEMBER: However a news story on 17 November by Duncan McLeod in TechCentral says the sale of the SA towers to IHS Towers will be for R6.4bn, noting “the deal is subject to regulatory and other approvals and is expected to close in the first quarter of 2022”.

It is restructuring, including splitting off its fintech and fibre divisions. News agency Bloomberg reported on 7 November that MTN Group (market value $21bn) had made a bid for Telkom South Africa (market value $1.6bn), seeking to close the gap on bigger rival Vodacom Group, although Telkom is apparently not interested. Vodacom also announced on 10 November that it has agreed terms to acquire a strategic stake in Community Investment Ventures Holdings’ (CIVH) fibre assets in South Africa.

On 8 November, the International Finance Corporation (IFC) announced further moves in its partnership with Strive Masiyiwa’s Liquid Intelligent Technologies. It said: “IFC’s equity and debt investments in Liquid Intelligent Technologies, which to date total approximately $250 million, will support the company to grow its hyperscale data center capacity in Egypt, Kenya, Nigeria, and South Africa through its subsidiary, Africa Data Centres. Liquid Intelligent Technology’s fibre broadband network covers 100,000 km in sub-Saharan Africa”.

Ringing up liquidity for African capital markets

The listings by telecoms companies have been transforming Africa’s capital markets – for example the MTN Uganda offer may boost the number of shareholders registered in Uganda from 40,000 to 200,000

In many countries Government policy strongly encourages telcoms companies to list on the national stock exchanges, helping the growth and depth of the capital markets. Regulators have been forcing the pace, by making listing and public ownership of shares a condition either of licensing or in other disputes.

In Uganda, Keith Kalyegira, Chief Executive Officer of the Capital Markets Authority, said: “We expect a marked improvement of liquidity in the market and the balance sheets of the intermediaries pre- and post-IPO.”

MTN Nigeria joined the NGX in a $5.1 bn listing by introduction of 20.4 billion shares in May 2019 ( covered in African Capital Markets News. The shares were initially priced at NGN 90 each. That NGX listing was part of a settlement with the Federal Government of Nigeria after a $5.2bn fine was imposed for failing to meet at 2016 deadline to register SIM cards.

Oscar Onyema of NGX said at the time: “This listing will promote liquidity for MTN Nigeria, enhance its value and increase transparency, as our platform remains one of the best avenues for raising capital and enabling sustainable growth for national development”.

UPDATED 17 NOV for details of SA towers sale to IHS Towers.

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