Airtel, DANGCEM Account for 38% of NGX, Shares Buyback Reduce Volatility

Airtel, DANGCEM Account for 38% of NGX, Shares Buyback Reduce Volatility

Airtel Africa Plc still maintains its highest valuation on the Nigerian Exchange (NGX) in the just concluded week and Dangote Cement shares valuation also remained steady.

Ticker: DANGCEM share price volatility has reduced after the second-largest listed company by valuation completed its second tranche share repurchase programme. READ: Dangote Cement Launches 2nd Tranche of Share Buyback Plan

As of Friday, the two companies were valued by investors in the domestic bourse at N9.4 trillion, translating to about 38% of the entire equity capitalisation of N25.25 trillion.

MTN Nigeria, the market challenger, valuation printed at N4.356 trillion, though some analysts said the Telco giant appears undervalued. Equity analysts believe MTN Nigeria PLC has stronger, and perhaps better fundamentals than Airtel Africa.

After MTN group retail offers to Nigerian investors, its stock price has also jumped and there has been traction but less traded Airtel has kept to its largest position in the local market.  Just the three companies account for about 55% of what Nigeria calls its equity market.

For the largest companies by valuations, the stock market rout witnessed in the past weeks failed to alter the two companies’ valuation negatively, keeping Dangote cement share price at N273.5 in the last seven trading sessions.

According to trading data from the Nigerian Exchange, the cement company’s valuation ended the week at N4.66 trillion on 17.040 billion outstanding shares, trailing Airtel Africa with more than N4.7 trillion in valuation.

The two companies share a similar share price trend. Airtel Africa had also repurchased its own shares from the Nigerian minority shareholders. As of Friday’s close, Airtel Africa’s 3.758 billion outstanding shares could be acquired for N4.736 trillion in the equity market.

Permissible by regulation, Companies are often allowed to buy back their shares from the stock market for reasons including stemming share price movement. The closely-held shares would then have smaller trading records except large shareholders decide to sell in the open space.

Airtel Africa’s Investors Relations Officer Morten Singleton told MarketForces Africa that the minority buyback offer related to its Nigerian subsidiary, Airtel Networks Limited, has nothing to do with Airtel Africa plc.’s listing on the Nigerian Exchange. 

“All that has happened is that we have reduced the minority holdings in our Nigerian subsidiary to 0.04%.

“That means that all of our public shareholders in Airtel Africa Plc -both those invested on the LSE and the NGX – now receive the benefit of 99.96% of the performance of our Airtel Nigeria subsidiary”, Singleton said in a response to an email enquiry.

While Airtel Africa has dual quotations in Nigeria and London, Dangote cement is only quoted in the Nigerian stock market. Some analysts had projected that the cement company share repurchase was initiated as part of an effort to list the stock outside the Nigerian market.

“…Dangote is trying to obtain the right price that would form the basis for its London Stock Exchange price quotation”, an investment banker told MarketForces Africa.

Critics still believe that the Nigerian Exchange has failed to reward performance and there are unanswered questions posed to nobody. #Airtel, DANGCEM Account for 38% of NGX, Shares Buyback Reduce Volatility