MTNN public offer: Subscribers allotment likely in February

Shareholders who took advantage of the opportunity in recently concluded retail public offering by Nigeria’s largest telecommunications company, MTN Nigeria Communications (MTN Nigeria) Plc will soon be announced after the allotment of the shares by the Security and Exchange Commission (SEC).

Though, the odds favour next month (February) for the securities accounts of the offer subscribers to be credited, according to those familiar with the public offering. The subscription rate of the offer which closed on December 14, 2021 is expected to print at a high of 100percent.

“The allotment schedule has just been filed with the SEC. Following the consideration and approval of the regulator, the effective allotment would be availed to the Central Securities Clearing System (CSCS), which would have the mandate to credit/debit subscribers/hitherto shareholders’ account within 15days of receiving the approved allotment schedule,” an informed market source told BusinessDay.

Nigeria’s largest telecommunications provider, MTN Nigeria Communications (MTNN) Plc started public offer of its shares on Wednesday December 1 which allowed retail investors to purchase up to 575 million shares at N169 per share—lower than its share price on the secondary market.

The N197 per share which MTNN exchanged at the secondary market on January 6, 2022 represents positive return of 16 percent year-to-date (YtD), outperforming the entire market which recorded +2.09 percent return YtD.

The offer was described as “innovative” for its incentive structure and digital application process. Investors who bought and hold the shares allotted to them for at least 12 months after the allotted date are allowed an incentive of one free share for every 20 shares purchased, subject to a maximum of 250 free shares per investor.

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The MTNN public offer was the first digital subscription in Nigeria administered by a Nigerian Exchange Limited (NGX), which allowed investors to subscribe for the shares electronically.

Considering the required SEC review and other processes, the allotment may be sometime early February, our source further noted.

The public offer which closed on December 14 was in line with MTN Group’s commitment to reduce its shareholding in MTN Nigeria from 79percent to 65percent over time.

Investors who sought to invest in stocks with higher returns – in form of capital appreciation and dividend yield had gone for the MTNN offer.

MTNN is the largest listed company by revenue and the second largest listed company in Nigeria by market capitalisation offers returns to shareholders.

MTN Nigeria is part of the MTN Group. It’s a leading emerging markets operator with 272 million subscribers, 119million active data users and 51million active mobile money customers. It is the leading operator with over 50percent market share.

MTN Group holds about 79 percent stake in MTNN; plans to progressively reduce this to circa 65percent through a series of offers for sale.

While the public offer was aimed at providing more Nigerians with the opportunity to own an equity stake in MTN Nigeria, it introduces a wider base of Nigerian shareholders into the ownership of MTN Nigeria; increases free float of MTN Nigeria on the Nigerian Exchange Limited (NGX); and enhances the liquidity of MTNN shares for existing and future shareholders.

In third-quarter (Q3) to September 2021, MTNN recorded stellar financial performance, delivering the largest revenues of any publicly listed Nigerian corporate.

Service revenue grew by 23.7percent to N1.204trillion; Data Revenue was up by 51.5percent to N366billion; Voice Revenue went up by 10.6percent to N722billion; EBITDA Margin of N635billion represents an increase by 52.6percent; Profit After Tax (PAT) grew by 52.7percent to N220billion while interim Dividend Per Share was up by 30percen to N4.55.

Coronation Securities analysts in their note to investors had noted that MTNN has a dividend payout policy of 80percent of earnings, adding that the current dividend yield is around 5.5percent. They analysts saw the MTNN offer as one that represented excellent value for investors.

“MTNN investors have enjoyed impressive returns both via dividends and share price returns. Since listing on the NGX in 2019, the stock share price has risen by 111.11percent. Over the last ten years, the company has paid dividends consistently (barring the regulatory fine years of 2016 -2017),” the analysts noted.

Also, United Capital Research analysts had in a December 1 note to equity investors noted that “MTNN remains an undervalued stock when compared to peers across Africa.”

Despite the thin discount between the offer price of N169/share and current market price of N171/share, the analysts noted that taking up the offer for sale helped investors acquire shares without significant market impact as well as avoiding transaction costs.