What next after MTNN Plc allege breach of listing rules?
MTN Nigeria

What next after MTNN Plc allege breach of listing rules?

One of my colleagues at the MarketForces Africa sometimes ago asked; “Would stock market behaves differently if all the Telcos were to be listed”.

Honestly, I didn’t have an idea where that thought came from. But would market really behaves differently? I think so.

Now, what next after MTNN allege breach of listing rules? Don’t forget, the company has denied wrongdoing – but that has always been the case, denial.

MTNN know how to do business, and that explains why the company’s fundamentals continue to spur performance.

One of the top shareholders willingly allowed the market to take away breathe of his bank while holding on to MTNN’s equity holding worth more than N30 billion.

The future is unpredictable and that is why investors are scouting for MTNN stock since the day it got listed? The fundamental is strong, and so is its numbers.

But, is MTNN familiar with ethics, code of corporate governance?

Future would tell how responsible is MTNN Plc’ in terms of corporate governance, ethics and best practices. That would ultimately determine investors’ sentiment because future fine may come heavier.

Historically, MTNN has not proved to be a responsible organisation. Unlike before the listing, now its activities would be closely monitored.

Investors, analysts and regulators would be very much interested in the company’s affairs now. The management has to familiarize with listing requirements, ethics and code of corporate governance.

The telecommunication company’s rating in the past in this regard cannot be envied. It is the only company that has ever been fined in trillion naira in Nigeria.

This pose some challenges to the management. Any break in corporate governance code now would be sanctioned by the regulators.

The Securities and Exchange Commission, The Nigerian Stock Exchange but honestly Central Bank of Nigeria would not have much say on the company’s activities going forward.

Better still, the burden of regulations has shifted to the SEC, NSE and perhaps investors by offloading and reloading of their baskets.

It is already happening. MTNN has been alleged to have breached listing code. MarketForces Africa is also well informed that regulators are investigating the issue.

By the fact of the case, MTNN breached 20% floatation rate using the Premium board on the bourse.

Creating artificial scarcity is tantamount to controlling both demand and supply end – economists don’t and won’t subscribe to that.

MTNN on the bourse

From its lowest point in 2019 at N10.6 trillion, Nigerian Stock market capitalisation has increased by about N3 trillion today.

Now that MTNN has become a Plc, its activities must come out from the shadow into heavy light of scrutiny by the market participants – say analysts, investors, subscribers and regulators alike.

Not many people really know that MTNN is making as much as N282 billion quarterly. Yes, that was the first quarter result of financial year 2019.

What that means is that, by straight extrapolation, the giant telecommunication firm would be crossing N1 trillion revenue in mark in 2019, comfortably.

While the upper line closed the quarter with N282 billion total revenue, the bottom line closed at N48.4 billion post all relevant accounting claims.

It means that 17.16% of the total revenue were turned to free cash flow to shareholders. That says a lot about industry as a highly capital intensive business – it burned cash.

How does estimates look like?

It has been estimated that MTN Plc would reach 47 million new mobile subscribers by 2023, with mobile penetration projected at 91.8% for Nigeria.

Also, the firm’s smartphone penetration is expected to increase to 95 % in the same period from 47% in 2018, according to data provided by Afrinvest.

Another upside to MTN is the fact that low data penetration and 4G coverage presents opportunities for data revenue growth.

This is apart from the fact that the low level of banking penetration is expected to support Fintech revenue.


MTN Nigeria recently published its first quarter of 2019 earnings ahead of the finalisation of its listing by introduction on the Nigerian Stock Exchange.

Okay, some investors are already looking for opportunity own the stock.

Wait, not so fast. MTN comes to market by way of introduction. That means, intention to raise fresh capital is not on the table, at least yet.

The Telco’s listing means the firm is giving existing shareholders platform to transact their shares.

In a plain language, the bourse would provide the stock investors an opportunity to convert their shares into cash –if needs be.

But do you think they would really be willing to sell in the short term? No, think about Nestle. This kind of stock are closely held by legacies investors.

I am seeing a stock that is not going to be widely held. What that means is that, it is premium stock and expect to see high price earnings ratio.

Does MTN deserves it? Simply, Yes!

In the first 3-months in 2019

In the first quarter of 2019, MTN average revenue per user (ARPU) improved by 1.1% year on year to N1, 510.

What this means is that the telecommunication company made at least N1510 per subscribers in the first quarter.

Don’t forget that the firm total subscribers increased by 3.6% to 60.3 million. 

In addition, data subscribers improved by 5.6 million to 20.4 million in the first quarter, data is the fastest growing segment, with a revenue share of 26.0%.

MTN Nigeria is the undisputed leader with market share by subscribers and value of 39.0% and 50.0% respectively.

Looking at the income statement, it would be observe that the telecommunication company’s revenue increased by 13.2% year on year to N282 billion in the first quarter of 2019, driven by voice (74.9%), data (16.6%), Fintech (2.9%) and Digital (1.0%) revenues.

Read Also: MTNN earnings beat fails to lift share price 7-trading session straight

However, there are other areas where MTN is generating revenue apart from voice, data and the like. In the period, other sources accounted for 4.5%.

In terms of earnings capability, MTN earnings before interest, depreciation and amortization, EBITDA, margin increased to 53.3% in the first quarter compare with 41.8% in the comparable period in 2018. Obviously, before it comes to market.

Down the line, MTN profit after tax (PAT) rose to N48.4 billion in the first quarter of the listing from N32.2 billion in the comparable period in 2018.

This translated to a PAT margin of 17.2% while MTN effective dividend pay-out is 80.0%. That means, only 20% of the after profit were retain as undistributed.

Meanwhile, MTN Group plans to issue commercial paper worth an estimated N200 billion in 2019.

You see? There is a signal, albeit positive for a company that is coming to the market by way of introduction and unwilling to raise fresh funds but chose to go for fixed interest source of funds.

This is just to say; “we don’t want our interest to be diluted – yet”.

It would be recalled that MTN Nigeria Communications Plc announced on the 24th April 2019 that it had completed its conversion from a private company to a public liability company (Plc).

The conversion is a legal requirement for MTN’s listing by introduction on the Nigerian Stock Exchange (NSE).  

Now, the firm has completed registration of 20,354,513,050 (20.35 billion) ordinary shares of N0.02 each with the Securities and Exchange Commission (SEC) on 8th May 2019.

 “We expect the listing by introduction on the Nigerian Stock Exchange (NSE) to be completed in the first half of 2019”, Afrinvest noted.

MarketForces Africa investing survey discovered that many people want MTN to raise funds by the way of public offer.

Some analysts said that public offer would be oversubscribed as MTN is perceived as money making machine in general.

What next after MTNN Plc allege breach of listing rules?

SOURCEJulius Alagbe
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