MTN Repatriates Cash from Nigeria as FX Condition Improves
Amidst the plan to sell down a 14 per cent stake in Nigeria operation, MTN has said the group was able to upstream cash from Nigeria in the third quarter as foreign exchange condition improves.
MTN group hinted about the development in its earnings transcript call with analysts reviewed by MarketForces Africa today, as some analysts predict retail of price between N170-180 per share for expected public offer issuance in December 2021.
“… We managed to repatriate about R4.6 billion in the third quarter, which includes R2.3 billion (about $150 million) from Nigeria as we previously reported at interims”, TSholo Molefe told the conference. He said this was upstreamed post the June period-end.
“… cumulative year-to-date trend, we have repatriated a total of about R13.9 billion across the markets. Post the quarter-end there has been some further upstreaming from Nigeria which is really encouraging.
“However, we will be able to provide you with a more meaningful update on how we are progressing in the second half when we present our full-year results in March next year”, he added.
The group has proceeded with the sell-down of MTN Nigeria announced with an intention to issue a public offer of up to 575 million ordinary shares, estimated at about 2.8% of MTN Nigeria.
“We see probably three series of sell-downs, and this is the first one where we really are looking to build a strong retail base”, MTN told analysts at the conference call.
The group had previously communicated intention to sell down approximately 14% of the current shareholding, saying that the recent closed Bookbuild is the first step towards that.
Explaining its performance at the earnings call, MTN said the Nigerian market sees impacts from network shutdowns related to security concerns mostly in the northern states.
It said the move impacted subscriber net additions and service revenue trends in the period. “If these shutdowns continue we may experience slightly softer growth in Q4 in the affected regions”, the group remarked.
MTN group noted that National Identification Number (NIN) registration deadline in Nigeria was extended to the end of December 2021, which it considers a welcome decision from the authority.
Speaking to the development, MTN Nigeria said Telecom Company will continue with accelerated efforts to register all its subscribers to meet this deadline.
It hinted that data growth in Nigeria has accelerated strongly and the telecom giant will invest accordingly to capture the growth particularly in 4G and 5G when the relevant spectrum frequencies have been secured.
“We have been encouraged… with some of the cash upstreaming we have received post the period-end. And we will work with the team in Nigeria to see if we can replicate what we did in the first half”.
Also, it said data growth in Nigeria has accelerated strongly and the group says will invest accordingly to capture the growth particularly in 4G and 5G when the relevant spectrum frequencies have been secured.
When asked by analysts, about exchange rate dynamics and spot rate for repatriation of funds, the MTN leadership however couldn’t share the amount that had been repatriated in the fourth quarter.
Analysts at the conference tried to understand how the group see dollar liquidity in the Nigerian market, if repatriation is happening at the ₦460 level or whether that’s changed.
“I think oil prices remaining sustained at relatively high levels, the energy crunch across the world will mean that this stays probably for a couple of months if not certainly through the winter.
“And with production being at reasonable levels I think the situation in Nigeria on foreign currency becomes better than it probably was a quarter ago. But we can’t predict the future exactly what will happen
“What we do know is we’re trying to follow the same process we did in H1. Many thanks to Karl and his team. When dollars are available we look at the spot and forward rates, and if dollars are available we will make the decision as and when to upstream”, MTN Ralph Mupita told the conference.
He said, “We had some up streaming in the quarter. So no certainty, but we’re trying to have as best as possible a similar playbook to what we had in H1. But we can’t guarantee that from our perspective.
MTNN Price Steady after Bookbuild, Ahead of Public Offer
MTN Nigeria Plc share price is steady at N190 after the telecom giants Bookbuild notices to institutional investors ahead of initial public offer to Nigerians closed.
The Bookbuild allows MTN Nigeria and the lead manager to set the price that the shares will be sold to retail investors based on feedback from a small group of institutional or other qualified investors.
Chief Executive, Karl Toriola, told analysts at the company’s third quarter earnings conference call that MTN Nigeria plans 80% earnings distribution to shareholders.
However, some analysts believe the company may be seeking for share price re-rating as Nigerian Exchange quotation appear lower than its immediate competitor – Airtel Africa, the second-largest by market share in the country.
For Cordros Capital analysts, asides from the fact that the parent company intends to divest to realise gains from its investment, they think the action could have been induced by perceptions that the stock is not fairly valued.
“We find justification for this on the basis that MTNN currently trades at an enterprise value to earnings before interest tax, depreciation and amortization enterprise value as a proportion of earnings before interest tax depreciation and amortisation (EV/EBITDA) and price to earnings (P/E) multiples of 4.6x and 9.7x, compared to Airtel Africa with 5.0x and 16.4x, respectively”.
Accordingly, analysts said the need for a new price discovery via a book-building process seems justified.
“We think the price at the end of the book-building process will likely be at a 5% premium or discount to the 60-day volume-weighted average price of N175.86 as of 5 November being the date of the announcement”.
In the third quarter, MTN Nigeria grew service revenue by 22.9% year on year, and by 23.6% on a 9-months basis. This increase was attributed to a broad-based expansion across voice, up 7.4% year on year and actually accounted for 57.6% of revenue.
Also, the data segment expanded by +57.2% year on year, accounting for 33.2% of revenue while value-added services jumped +62.6%, accounting for 4.5% of revenue in the period.
MTN Nigeria aims to more than double data users to 80 million by 2025, Karl Toriola, Chief Executive told analysts at the third quarter earnings conference call. #MTN Repatriates Cash from Nigeria as FX Condition Improves. Read Also: MTN Nigeria Launches Equity Bookbuild to Investors
