MTN’s share sale oversubscribed as investors eye value

MTN’s sale of shares in its Nigerian unit to institutional investors has closed Friday with the telecommunication company recording an oversubscription for the shares offered, according to sources familiar with the transaction.

“There was strong interest from the Pension Funds, insurance companies and high net worth individuals and that has helped us with price discovery,” a source close to the transaction told BusinessDay Friday.

“We now look forward to the sale to retail investors next week after a successful outing this week.”

A source at one of the leading pension funds in Nigeria, who confirmed his firm’s participation, said bids were flying in from institutional investors due to the strong fundamentals of MTN Nigeria which only recently received approval in principle from the Central Bank of Nigeria to begin Payment Service Bank operations.

“MTN is one of the most resilient companies in Nigeria and one of the very few trillion naira revenue companies, yet there is still room for even more growth and investors are simply buying into that promise,” the source at the pension fund said. His firm submitted bids at around N160-N170 per share.

The PSB operations, though unclear when it will finally commence, open up a new income stream for a company already posting in excess of a trillion naira in revenues.

Read also: MTN, Airtel to face stiff mobile money competition in Nigeria

MTN Nigeria is on course to beat last year’s record revenue haul after raking in N1.206 trillion in the first nine months of 2021 which is only N144 billion away from last year’s total revenue of N1.35 trillion, according to data from its financial statement.

The N144 billion MTN Nigeria needs in the fourth quarter to equal 2020’s total revenue is less than half of its quarterly average revenue this year of N340 billion.

The pandemic, which crimped revenues of Nigerian companies last year, seemed to have minimal negative impact on MTN.

MTN received the thumbs up from Nigeria’s capital market regulator, the SEC, this week to sell a portion of its Nigerian unit to local investors in a deal where 575 million shares would be sold.

MTN could raise over N100 billion if the sale is fully subscribed using its current market price of N190 per share but it may come to less given that the sale would likely be at a discount.

Ten percent of the total shares to be sold was offered to institutional investors this week via a bookbuild -a share sale held over a short period of time- while the remaining 90 percent will be sold to retail investors next week.

MTN Nigeria closed at N190 per share Friday, according to data from the NGX.