The strong first-quarter performance by MTN’s Nigerian business will boost sentiment ahead of that unit’s initial public offering (IPO), which is expected later in 2018, says Africa Analysis director Dobek Pater.
MTN’s share price rose 1.8% to R128.50 on Monday after the group said subscriber growth in Nigeria accelerated in the three months to March.
MTN Nigeria reported net subscriber additions in the quarter of 2.3-million, from 2-million in the fourth quarter of 2017. This helped lift local-currency service revenues by 14.5% compared to a year before.
MTN plans to list its Nigerian business in 2018.
"I expect a lot of interest in the MTN IPO in Nigeria. The good first-quarter results … which promise a positive year ahead … will certainly help this," said Pater. Investor interest would have been healthy "even with poorer results", he said.
MTN Nigeria had "very good prospects" because data consumption and the adoption of digital services continued to grow in the country, which MTN dominated, he said.
"Given the depressed performance at MTN Nigeria in the recent past, I think there is certainly room for growth in its value going forward," Pater said.
MTN CEO Rob Shuter said last week the group had tried to keep the team working on the Nigerian IPO "as separate as possible" from the team managing operations.
"We’ve been saying that we see the Nigerian market turning. We’ve been saying that we think we are well positioned to take advantage of the turn. And I think you see that coming through in the quarter," Shuter said. He said that MTN Group had received $82m in dividend payments from the Nigerian business at the end of March.
Sentio Capital portfolio manager Imtiaz Suliman said consumers in Nigeria "seem to be coming back quite strongly. And I think the problems that the likes of 9Mobile have had have benefited MTN given that they’ve invested throughout the tough period and their network is definitely in better shape than some of its peers."
MTN plans to launch its IPO in Ghana in late May after receiving regulatory approval to do so, it said last week.
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