Africa’s largest mobile network, MTN confirmed last week that plans were underway to list in the Nigerian Stock Exchange as early as 2017. This was part of deal reached with the Federal Government that saw their fine on sim card registration cut to about N300 billion.
However, some nalysts now believe this listing could be a way of getting Nigerians to pay for the fine. Analysts on Monday’s Business Express on Smooth FM had opined that while the listing was on the long run beneficial to Nigerians, it could also be a smart move by the mobile phone giant to ensure that the Nigerian entity pays for the fine.
It is believed that when MTN eventually lists on the stock exchange, assets and liabilities of the Nigerian unit could be unbundled from the group and then listed on the Nigerian Stock Exchange. Some analysts believe that since the fine was incurred by its Nigerian entity, the expenses will be apportioned fully to the MTN Nigeria. As such, by the time the company is listed that expense would have impacted the net assets of the new Nigerian entity but may not affect the value of the share price when it eventually lists. Also, other MTN entities that are not listed in Nigeria will not bear that loss and will be shielded from any further losses incurred in Nigeria.
Another school of thought however believes, these are all conjectures and may not have the necessarily affect profits from MTN Nigeria. MTN Nigeria is one of the biggest entities owned by the MTN group and generates significant cash flows for the company. By contributing about 40% of the company’s operating profits, the group will still rely heavily on its Nigerian operations for group profits and dividend payments. In fact, we believe the company may only list a small portion of its shareholdings holding on to about 90% of the MTN Nigeria.