Documents pertaining to the MTN listing and IPO seen by Reuters, reveal the company intends raising $400 million from the Initial Public Offer (IPO) of its Nigerian unit. An IPO is the very first time a company sells its shares to the public on a stock exchange.
The Nigerian Communications Commission (NCC) initially fined the company $5.2 billion in 2015 for failing to disconnect improperly registered sims. The fine was however reduced to $1 billion following the intervention of then President Jacob Zuma. As part of the terms and conditions of the settlement of a $1.2 billion fine imposed in 2015, the company was required to list its Nigerian arm.
MTN is also listing on the Ghanian Stock Exchange this year. The listing on the Ghanian bourse is part of the conditions for the acquisition of a 4G licence in the country in 2015.
The telco will list 20 billion shares after a 1 for 5 share split, after which it will then proceed to pick the IPO price through book building. MTN Nigeria has a current valuation of $5.2 billion, going by its current over the counter price of $13. The nominal value of the shares will also be split from N1 to 2 kobo.
Book building is a valuation approach where the price of a stock or security is determined by investors who table the price they want to buy the asset for and the quantity they want to purchase. The sum of all the orders and the value is then used to determine the average price.
An investor roadshow is billed to hold between May and June, while listing could be between June and July.
What will the IPO proceeds be used for?
Proceeds from the IPO will be used to redeem preference shares issued to existing investors who bought the shares 11-years ago and also cut its dollar exposure.