MTN’s plan to sell a portion of its Nigerian unit to local investors has received the thumbs up from the West African country’s capital markets watchdog, moving it one step closer to closing a deal that could net it nearly R4bn.
The sale, which would be done via a so-called accelerated bookbuild — or a share sale held over a short period of time — to institutional investors, and a fixed price to retail investors, is the latest in a series of disposals by the company working to pay down debt, sharpen its focus on returns and reduce risk.
On Tuesday, MTN said the Nigerian Securities and Exchange Commission (SEC) had approved the offer for about 14%, or 575-million shares, of the business — one the biggest contributors to both sales and profits.
The institutional offer opens on Tuesday, closing on Friday, “after which a fixed price will be determined for the retail offer”. That offer is proposed to open after the institutional one is done, and once clearance is given by the SEC.
Shares in MTN Group closed 3.25% firmer at R162.62, having had a huge run which has seen the stock rocket 170% since the start of 2021.
“This is the first step in a series of offers over the near to medium-term for MTN Group to sell-down a total of up to 14% shareholding in MTN Nigeria,” MTN CEO Ralph Mupita said in a statement.
“This should result in greater ownership by Nigerian institutional and retail shareholders, and increased liquidity of the share on the Nigerian Stock Exchange,” he said.
Having had a somewhat rocky relationship with Nigerian authorities over the years, there has been much good news for MTN in recent weeks and months.
Earlier in November, MTN received a provisional licence to operate its mobile money platform in Nigeria, putting another block in place for the group reaching its goal of generating a fifth of its revenue from fintech.
Aside from boosting local ownership of the R306bn company, this latest deal also advances MTN’s strategy to slim down its sprawling portfolio and use the proceeds to pay down debt.
In October, IHS Towers, a Nigeria-born network tower company, made its US stock market debut, putting MTN — which holds about a third of the company — on a path to a bumper payday.
MTN holds a 29% interest in IHS Towers. By June 2021, the company estimated the value of that investment at R30.5bn. Selling down this stake, together with the repatriation of funds from Nigeria, would probably wipe out MTN’s debt.
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