MTN targets $1bn from Initial Public Offering

Johnson Okanlawon

MTN Group Limited, the Africa’s biggest wireless operator by sales, and minority shareholders in its Nigerian business are seeking to raise about $1 billion in an initial public offering.

The phone operator had agreed to list its shares in Nigeria as part of a deal to pay a N330 billion ($1 billion) fine in cash to the Nigerian government for missing a deadline to disconnect unregistered subscribers.

Minority shareholders may sell down their holdings or exit entirely, while MTN may offer a small portion of its stake in the business, one of the people familiar with the plan told Bloomberg.

The Johannesburg based company is still finetuning any offer and no final decision has been made on the amount, the people said. MTN declined to comment.

The IPO is part of a deal struck with the Federal Government to pay a N330 billion($1 billion) penalty for missing a deadline to disconnect unregistered subscribers.
The negotiations over the fine, which has contributed to a 38 percent decline in MTN’s share price since it became public in October, cost 1.3 billion rand in
professional-service fees, according to the company.

Nigeria is MTN’s biggest money spinner, accounting for more than a third of its
sales and profit for a company that has a market value on the Johannesburg bourse of 220 billion rand ($15 billion).

The country’s economic slump deepened in the second quarter as a declining oil
industry weighed on output, with gross domestic product contracting by 2.1 percent from a year earlier, after shrinking 0.4 percent in the first quarter.

Preparatory to the listing, MTN last month announced the appointment of Stanbic IBTC Capital Limited (together with its affiliates, The Standard Bank of South Africa Limited and Standard Advisory London Limited) and Citigroup Global Markets Limited as its Joint Transaction Advisors and Joint Global Coordinators with Stanbic acting as Lead Issuing House.

Although SEC recently said it was yet to receive the formal application from MTN, local stockbrokers have started working towards becoming part of the Nigerian parties to the offer so as to earn some income.

Market sources said brokers that have been having close working relationship with the Stanbic Capital and Citi Bank in Nigeria are already exploring that relationship to be part of the deal.