MTN considers listing in Nigeria after fine impasse is resolved

By The Rainbow

Cellular giant MTN could possibly have a secondary listing in Nigeria, its biggest market in the world.

The company Gave the hint on Thursday as it posted a lacklustre financial performance for the year to December, mainly as a result of the $3.9 billion (R60.9bn at Thursday's rate) fine imposed by the Nigerian Communications Commission. MTN shares rose 4.33 percent on the JSE yesterday to close at R141.63 on the back of the results

The company's executive chairman, Phuthuma Nhleko, told journalists, shareholders and analysts that MTN would list in Nigeria after the fine issue was resolved.

Nhleko said it had been tough to list before the company's licence was renewed in November for another five years.

“It was pointless to list only to have the licence withdrawn. Unfortunately once that was done, we had a fine. You can't list when there is major uncertainty. We are not averse to listing, it is a matter of having a conducive environment,” Nhleko said.

MTN withdrew its legal challenge against the fine last month and said yesterday that it had made a $250 million “goodwill payment” to the government.

The Nigerian fine was one of MTN's biggest missteps. It involved its failure to meet the regulator's deadline for deregistering about 5.1 million subscribers and led to the abrupt resignation of former chief executive Sifiso Dabengwa. The fine has bruised the MTN brand and its balance sheet.

Besides Nigeria, MTN operations also ground to a halt in South Africa in the first half of last year – which has since been resolved – but Iran's subscribers grew by 5 percent and Ghana subscribers rose by 17.5 percent to 16.2 million.

The group's headline earnings a share declined by 51.4 percent to 746c a share during the period under review as a result of the fine. The earnings were negatively affected by hyperinflation of 54c from a positive impact of 69c in 2014.

MTN also posted losses from its investment in African Internet Holdings and Middle East Internet Holding and from the tower companies.

Revenue flat
It declared a second half dividend of 830c, which brought the total dividend for the year to 1 310c, 5 percent higher than 2014. The company also said it envisaged declaring a 700c dividend considering the Nigerian fine and the liquidity of the naira.

Group revenue remained flat in the year, largely due to a decline in voice revenue in Nigeria, which had 61.3 million subscribers and a reduction in handset revenue in South Africa following a strike in the first half of the year, which led to lower distribution of handsets.

Nhleko, was at pains to explain the “complex” Nigerian SIM card registration process. “It is like being an operator and Home Affairs all at once, that is how complex it is,” he said.

But the lifting of Iran sanctions was a boost for MTN. “The lifting of sanctions in Iran is going to be important. Iran will be one of two large markets in the Middle East,” Nhleko said.

Analysts said MTN would need to jump through regulatory hurdles before listing in Nigeria. Philip Short of Old Mutual Equities said while the listing could be possible, it would not be feasible at the moment due to the volatile global and Nigerian markets.

“MTN would also need to get past the regulatory issues they currently face and pick up their operational performance before they list,” Short said. He added that the overall operational performance was weak.

“There were some positive areas in Iran and Ghana with the obvious negative being Nigeria. I think MTN surprised the market by maintaining their progressive dividend, where many expected them to cut. However, MTN did caution on next year's pay-out.”

Sibonginkosi Nyanga, an analyst at Momentum SP Reid Securities, said listing in Nigeria would be a positive step. “Nhleko said if the ingredients are right, MTN will list,” he said. “If they list in Nigeria, most Nigerians will not view MTN as a South African company.”