The second most capitalized company in the Nigerian Stock Exchange, MTN Nigeria, is now offering 13% of its holdings to the public. This is equivalent to 575 million shares which it will now offer at N169 per share but requires a purchase minimum of 20 shares. Notably, only 10% of the offer will go to individual purchasers while the rest are reserved for retail investors.
MTN, since its purchase of license to operate in Nigeria, has become the country’s largest telecommunications company raking in huge profits. The Guardian (Nigeria) reports that MTN’s core service of telecommunications jumped by a staggering 24% in the third quarter of 2021. MTN currently provides close to 271 million lines in the country after it added 200 million lines in the quarter. Nigeria generates the company’s largest profit of 32% outstripping its parent market of South Africa, which generates 25%.
The offer of shares to Nigerians at N169 per share is below its current stock market value of N175 per share on December 15. The offering is expected to raise capital for product development that should further enhance the company’s value. It is believed that with digital market expansion in Nigeria and the rapid rise in the country’s population, demand for MTN products will consequently rise leading to rise in the value of the company’s stock. However, there are also concerns that civil crises in the country, which led to shutdown of telecommunications services in recent times, may affect the company’s predicted upward trajectory.
The Organization for Impact and Reform (OFIAR) hopes that the further capitalization of companies such as MTN Nigeria bodes well for the country’s economy. An OFIAR spokesperson notes that such capitalization may help develop the digital economy broadly, creating allied jobs for a growing youth population. The spokesperson notes: “in the early development of telecommunications, it offered micro business opportunities for ‘umbrella’ vendors and helped reduce joblessness.”
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