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Nigeria's leading finance and market intelligence news report.

MTN Nigeria eyes 2m retail investors ahead 14% share sale

MTN Group is targeting at least 2 million retail investors in Nigeria ahead of its plan to sell 14 percent of shares in its local unit on the Nigerian Exchange Group (NGX).

“We would like to have the broadest retail shareholder base of any company in the history of the stock exchange of Nigeria,” Karl Toriola, CEO of MTN Nigeria, told BusinessDay on Thursday.

“We believe that it is coming in the short to medium term. We just need to programme all that in the context of the COVID-19 situation, working constructively with the relevant authority,” Toriola said.

Retail investors are non-professional investors who buy and sell through brokerage firms or other types of investment accounts. MTN is the largest telecommunication operator in Nigeria with 39.66 percent share of the market and 74 million subscribers.

Although retail investors represent a significant opportunity for the capital market and are in larger numbers than institutional investors, but they have largely not fully represented their potential in the market. This is behind recent steps by the Securities and Exchange Commission (SEC) to create more avenues to attract more retail investors.

At a webinar on Wednesday organised by the SEC, stakeholders in the capital market said they were ready to expand the reach of the market to the grassroots.

It is also not surprising that MTN Nigeria will be focusing on this segment of the economy given that many potential retail investors fall within the financially excluded population the country is making efforts to address. Nigeria now has about 45 percent of its total population financially excluded.

Read Also: MTN commits N640bn to expand broadband access across Nigeria

MTNN’s first quarter (Q1) profit before tax grew 34 percent year-on-year to N103 billion. The key drivers were sales growth of 17 percent year-on-year, a 90 basis points year-on-year earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin expansion to 53.1 percent, and an 11 percent year-on-year reduction in net finance costs to N30 billion.

Further down the profit and loss, profit after tax (PAT) expanded by 43 percent year-on-year, thanks to a 433 basis points reduction in the tax rate to 28.4 percent.

MTN had listed shares by introduction in 2019 and promised that it would pursue a public offer, giving more Nigerians greater access to owning a part of the company. The listing by introduction means that the shares of existing MTN Nigeria shareholders will be listed without an additional public sale of shares.

Last week, the Group CEO and Group CFO of MTN visited top public officials in Nigeria, including President Muhammadu Buhari, Vice President Yemi Osinbajo, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), Isa Ali Pantami, minister of communications and digital economy. At the visits, the company’s executives reiterated their commitment to providing connectivity to Nigerians, particularly those in the rural areas where broadband services are scarce.

To encourage inclusion, the company said it would see to the completion of its three-year plan during which it would deploy about N640 billion to two critical areas: broadband acceleration in line with the National Broadband Plan and the connections of the remaining locations in Nigeria that do not have access to modern telecommunication services or rural connectivity.

Toriola told BusinessDay this commitment was why MTN was particularly proud of a recent rating by Global Credit Ratings (GCR) upgrading the national scale long-term issuer rating of MTN Nigeria Communications plc (MTNN) to AAA, and affirmed the national scale short-term rating of A1+, with a stable outlook.

In addition, GCR upgraded the national scale long-term rating of the recently concluded N110 billion Series 1 Senior Unsecured Bond to AAA with a stable outlook. The N110 billion Series 1 Senior Unsecured Bond is the largest of any company on the NGX and in the history of the telecommunication sector. According to Toriola, the ratings reflect MTN’s very strong competitive position as the leading provider of telecommunications services in Nigeria as well as its strong earnings and cash flow, which has supported a robust financial profile.

“The bond gives us liquidity and a stable long-term basis and the result of that is going to be the acceleration of telecommunication services and broadband in Nigeria,” he said.

MTN also said it was willing to work with the CBN towards achieving its goal of becoming a Payment Service Bank (PSB).

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