MTN: The making of a mega brand
The American Author, speaker and Pastor, John Calvin Maxwell perhaps had the Nigerian telephony market in mind when he made his famous statement that “a leader is one who knows the way, goes the way and shows the way”.
Today, the famous quote appears to have encapsulated the current positioning of MTN, the number one telephone network group in the country as it is poised to enlist in the Nigerian Stock Exchange.
MTN Nigeria (MTNN) is a subsidiary of MTN Group, South Africa (Africa’s biggest mobile phone operator) and the largest contributor to the group earnings accounting for about 33% of its revenue (5-year average). According to the Nigerian Communications Commission (NCC), the telecommunications giant has a customer base of over 52 million subscribers, accounting for about 36% market share in the country.
MTNN began operations in 2001 after securing one of four GSM licenses offered by the Nigerian Government in a deal that was worth $285 million.
Since then, the Telco giant has made significant investments in its mobile infrastructure, with total assets worth over ₦1 trillion as at FY’16, and has enjoyed a decent level of return over the years.
MTNN offers cellular network access to its subscribers within Nigeria, with airtime and subscription accounting for 64% of revenue as at FY’16 and roaming services (International roaming services, including data roaming, in-flight roaming, and WiFi roaming services) making up the second largest contributor to revenue at 12%.
Currently, MTNN is controlled by MTN International (Mauritius) Limited (MTNI) with 75.8% ownership. Also, 18.7% of its outstanding ordinary shares is held by Nigerian shareholders through special purpose vehicles. In addition, 2.8% is owned by Mobile Telephone Networks NIC B.V and 1.8% owned by Public Investment Corporation SOC Limited.
In 2017 when it first announced the decision, the company had said it could not confirm the date for the listing. But that curtain of uncertainty has been finally removed following an announcement by MTN Group recently that it would be on the floor by the first half of 2019.
The telecommunication giant made this disclosure in a mailed statement recently. The announcement is coming on the heels of its recording very positive trade numbers in the 2018 fiscal year. Revenue in Nigeria rose from N887 billion in 2017 to N1.03 trillion in 2018 an increase of 17.1% year on year.
The Nigerian operations also accounted for 28.2% of revenue made by the MTN Group. There was growth across all segments. Voice revenue rose by 18.7%, while data revenue jumped 40.1%. Data traffic also increased by 56.3%.
But the company, which also declared a new subscriber milestone of 58million nationwide, quickly added that the listing would be done without raising new money from investors immediately.
In the statement, the company said the process would be achieved “via a listing by introduction and will be followed by a public offer once market conditions are conducive. Over time, and subject to market conditions, we anticipate that the participation of Nigerians in the ownership of the business will increase from around 20% to 35%.”
“The Company’s listing on the Exchange will create a new telecoms asset class for investors and provide an opportunity for a wider group of Nigerians to participate in our investment story,” the company added.
The company, which is estimated to be worth about $6 billion, has obtained shareholder approval for the listing and is in the process of seeking regulatory approvals.
Business analysts have commended the new development, agreeing that the listing of the largest telecommunications company in Nigeria on the domestic bourse is a game changer for the equity market.
Speaking about the development, in an earlier interview, NSE’s CEO, Oscar Onyema said he was optimistic that MTN Nigeria’s listing would have a positive impact on Nigeria and other stakeholders. He told CNBC that the listing would also give MTN subscribers a sense of belonging through an ownership stake in the telecommunications company.
According to Onyema, “MTN listing will have a significant positive impact on the market. It will give investors something new and exciting to participate in; it will give their subscribers an opportunity to take an ownership stake in the company, and, therefore, continue to do business with them. We (NSE) continue to engage with them (MTN) and to have conversations around the listing potentials. It is something that they believe they want to do; they’ve publicly stated that they want to do it”.
Also speaking about the development, Publicity Secretary of the Independent Shareholders Association of Nigeria, ISAN, Mr. Moses Igbrude, has stated that the planned listing by MTN Nigeria is a good development for investors in the Nigerian market.
Similarly, Mr. Ifedayo Olowoporoku of Vetiva Capital Management Limited, an investment company, MTN Nigeria’s listing is a move that will deliver a lot of benefits to Nigeria. She noted that the Group’s strength in terms of global brand recognition and strong financial base will reinforce investors’ confidence in the Nigerian market, adding that it will also encourage other operators in the sector to begin to accelerate efforts at listing (their companies) on the Nigerian Stock Exchange.
“We believe the Group’s strong global brand recognition and reputation and strong financials present MTNN as a Blue Chip on the Nigerian Bourse and as such we expect this to further support foreign interest in the Nigerian equity space, the analyst said.
She said further that “In the short to medium term, we expect listing discussions on other telecoms operators to remain on the table amidst persistent pressure from national regulators across Africa; Vodacom in 2017 listed 25% of its Tanzanian business on the Dar es Salaam Stock Exchange (in line with government imposed regulation for telecoms companies to list at least 25% of their shares locally), MTN Ghana agreed to list 35% of its shares in order to obtain a 15-year 4G license”.
She also noted that, on the company’s side, additional equity capital from the equities market would help to improve the firm’s financial flexibility and capital structure; and it could potentially also support a better relationship with its regulator (NCC), adding that the brand would also benefit in terms of market penetration and brand reputation because a larger pool of Nigerians would now feel a connection to the brand beyond just being mere consumers.
The marketing communications sector is most certainly going to be impacted by this new development. Indeed, the proposed listing by the telco brand will definitely excite the integrated marketing communications sector this year.
RECOMMENDED ARTICLES
Comment
No comments found.