This Corporate News Compilation for the week ended March 10th, 2018 is brought to you by Bluechip Technology Ltd Nigeria.
1. We begin with another 9 Mobile Story. Every week, the embattled telecom is in the news and this will likely persist till well after the consummation of their sale, so please bear with us.
We were stunned last week when Smile Telecoms, the supposed reserved bidder after Teleology’s, wrote a letter of protest to Barclays Africa, the financial advisors to the deal. They chided Barclays on the “untidy” manner with which it carried out the transaction suggesting that the process was not transparent. To be more specific, they claim that for example, the preferred bidder was announced before the deadline of February 26, 2018.
The report also claimed that regulators had given the two shortlisted bidders 30 days from January 26th to raise their bid, which ends February 26th. Smile, who wrote via their Lawyers, Templars also claimed that Teleology’s $50 million non-refundable fees were supposed to have been paid immediately they were announced winners, however, Barclays is giving them 3 weeks to make payments.
Sources with knowledge of this deal also indicate that Barclays has the right to change the process of the deal at any point in time and without recourse.
2. On a brighter note, MTN Group released its 2017 annual results last week and as usual they did not disappoint. Focusing on the result of the Nigerian entity, MTN raked in a whopping N1 trillion in 2017 alone, with about N240billion of this revenue coming from data and digital.
Data revenue alone earned N127 billion a monstrous 86% increase year on year. It’s incredible just how solid this business model and I can’t blame Smile for reeling on the 9 Mobile deal. Digital revenue which comprised of VAS and MFS generated N112 billion in Nigeria. VAS is Value Added Services while MFS is Mobile Financial Services. The message in this result is stark for operators in this industry.
MTN has the financial resources to obliterate any perceived competition and only an anti-trust legislation is a close threat. One won’t be wrong to assume that the expected listing on the Nigerian Stock Exchange will give the company a shield against any regulatory or state antagonism. Just Saying…
3. Still, on telecoms, ntel announced that it has entered a partnership with MTN and 9Mobile for local roaming services in Nigeria.
Recall, we had reported this in a previous Newsletter (Thread) that a deal like this was in the offing. In a nutshell, ntel subscribers can make calls from their lines if they find themselves in parts of the country where they do not have coverage. They will simply roam on MTN or 9Mobile networks just the same way it works when you are abroad.
The service is expected to be rolled out in April. Just in case you are wondering what this will cost ntel subscribers, they are yet to settle on pricing. Everything came full circle following this story. To think just under two decades ago, MTN and Econet were practically begging Nitel to plug into their network infrastructure located in Saka Tinubu.
The frustration they experienced with Nitel led them to take their destiny in their hands and started investing in infrastructures that ensured they had wider coverage across the country.
4. Wema Bank ALAT, continued with its dominance in the digital banking space, announcing two new features: quick short-term loans and a virtual dollar card for paying online internationally.
This puts ALAT right in direct competition with several Fintech Companies in the micro-lending space, who should be worried that ALAT already has a headstart of about 100k users. We have seen a rise in the interest of Fintech companies in the micro-lending space which is considered risky but untapped.
From what we gather from Fintech companies in this space, a combination of technological improvements and regulatory requirements can mitigate some of the perceived risks inherent in microlending. For example, they leverage on user-generated ratings of lenders and borrowers to rank users of the platforms and price risk. Borrowers on this platform are also restricted to borrowing limits which increase in line with their credit score.
5. Mastercard has announced the acquisition of South Africa’s mobile payments technology platform-Oltio Card International from Standard Bank Group.
This acquisition will enable Mastercard to enhance its payments solutions and also enable small businesses to accept digital payments using Quick Response QR codes. This move appears to be part of Mastercard’s broader African expansion strategy plan to pivot into digital contactless payment, where it seems to be behind in early adoption.
Trust is still a major issue in mobile payment thus applications that enhance authenticity are very valuable in this space. Interesting to note that Oltio used to be MTN Mobile Money South Africa.
6. A “luxury real estate company” Sujimoto Construction, reported last week that it was going to develop a new project called Giuliano by Sujimoto.
According to the MD of the company, Mr Sijibomi Ogundele aka Sujimoto, the project was inspired by the works of the Medici Family, with the functionality of 21st Century lifestyle to give Nigerian investors value for money and strong competitive edge over other projects in terms of style and finishing.
According to him, before bringing it to the public, they wanted to introduce it to the brokers and agents for them to understand the reason for the project and the story behind it. I found this funny, considering that it was in the papers.
He, however, went on to explain the project “The project is for residential use and will be completed by October. It is an affordable luxury, which means it has been compared with what is in the market and has been found to be cheaper. We have also developed a flexible payment plan where investors make a minimum deposit and spread the payment over 10 months.”
He also claims that the project offers 19% return on equity and another 9% on rental income. Critics of Mr Sujimoto suggest this story should be a candidate for our “One Chance” story of the week. They insisted on a Caveat Emptor.
- Last week will be remembered for the controversial insertion of the name “Alpha Beta” in the heavily unpopular Lagos State Land Use Charge Act.
The state government, while scrambling to defend the insertion as an honest error, insisted that the insertion of Alpha Beta was in error and that it will be deleted from the version that they will gazette.
Alpha Beta also issued their own press release denying any involvement in the LUC Act. According to them, “Although we do business with the state, as we do with other individuals and organisations that require our services, Land Use Charge collection and/or administration is not part of our brief. We make bold to state, therefore, that the stories making the rounds that link us to it are not true and do not represent our correct relationship with the government,”
Interesting to note that some of Alpha Beta’s advertised clients are Ekiti, Abia, Kano, Akwa Ibom and Plateau State. I was wondering why PWC was on TV, appearing to be defending this controversial law, only to learn that they were instrumental in crafting this law. Apparently, the provided some sort of advisory services to the state on a lot of issues.
- The Chairman of Transcorp Group, Mr Tony Elumelu informed the media last week that it has kickstarted the construction of the 25 storey Transcorp Hotels Property located on Glover road Ikoyi.
The development was halted a few years back as the country fell into recession and the tourism market plummeted. According to Mr Elumelu, “We are planning to build a 25-storey hotel in Lagos… we will see the governor and discuss with him on how we can get their support. We want to do this project to further create jobs for the people of Lagos state,”
I guess the support from Lagos State required here might be around planning approvals and other issues bothering on ease of doing business. Hotel developers face major difficulty constructing hotels or multi-use facilities in Lagos State and much of this has to do with plan approvals, fees and taxes.
9. Nigeria Mortgage Refinance Co (NMRC) granted an interview to Bloomberg last week where they revealed some interesting nuggets.
The Chief Executive Officer Charles Inyangete, said in the interview that the NMRC was planning to “double” its Asset Base, currently at N40 billion. To achieve this, they plan to access the Nigerian Bond Market, which I find quite disturbing.
According to them, they believe they can get yields “better than the 14.9% it paid when it issued 8 billion naira of notes in 2015.” So, they plan to issue 11 billion naira worth of 15-year bonds through multiple sales as part of a five-year 440 billion-naira program.
They also want to launch a N1 billion Sukuk (non-interest Islamic Loans) by June this year. It is disturbing that the NMRC is looking to fund its balance sheet via more loans. I do not see them getting yields of less than 12% in the present bond market, which is still high considering that they will have to lend to mortgage creators at a premium.
This suggest, we may never see Mortgage rate drop below single digit in the next 5-10 years a situation that has mostly inhibited the ability of middle class Nigerians to own homes.
Did you know that at least 55% of the Mortgage Industry’s N94 billion loans were classified as non-performing by the NDIC last year?
10. Haier Thermocool launched its Energy saving Haier Thermocool refrigerators, freezers and air conditioners into the Nigeria market last week.
They claim the products energy saving refrigerators and freezers have the ability to save up to forty percent on energy consumption while the energy saving inverter DC technology air conditioner, aptly named GENPAL, can save up to sixty percent on energy consumption. If I am not mistaken, LG was the first to launch energy saving Air Conditioners in Nigeria.
I am still waiting for an affordable fridge and TV that has an inbuilt inverter that can have you use it for a protracted period of no electricity supply after charging. That one will be the game change, in my opinion.
11. So, Niger State reported last week that a private investment company is set to invest N200 billion for industrial parks and airstrip in the state.
According to the report, the company, Hydropolis Nigeria Limited, is to invest in a land area of about 524 hectares located in Kainji, Borgu local government area of the state. As expected the state will offer tax holidays and other incentives to the developers.
The investors also revealed that they acquired 20 hectares of land to resettle the affected four villagers in Anfani, adding that the organisation has gone a long way in building social amenities that will make life comfortable for the moving villagers.
Last year, Hydropolis reported that the sum of N18 million was paid as part of the compensation for the land acquired for the construction of an industrial park. You gotta love these PPP contraptions. N18 million versus N200billion!!!
12. Alright, so Krispy Kreme Doughnuts eventually launched in the country last week. Reports indicate Quality Foods Africa (I hear it is a Lebanese owned or run Company) that brought the franchise into the country invested about $7 million to get Krispy Kreme here.
They are currently located at the Ikeja City Mall. I was quite impressed with their marketing campaign where they seemingly gave out doughnuts for free to people who engaged with them on Instagram.
It’s another lesson on how to market in a difficult environment like Nigeria. We understand that the next location for Krispy Kreme will be in a major high street in Victoria Island rather than in a mall like they did in Ikeja. QFA is thought to have signed a 5 year deal with Krispy Kreme to roll out 20 locations in Nigeria.
As deals like these go, the performance of the first 3-5 locations determines how quickly they can roll out the remaining 18. Krispy Kreme is very popular in Asia and their first African location was in Johannesburg South Africa.
- Flour Mills Nigeria Plc revealed plans are in earnest to launch their N50 billion “Sugar Estate” in Niger State. The Sunti Golden Sugar Estate is scheduled for launch on March 15 by President Buhari.
I hope he does attend in person as I can’t recall him attending a private sector launch at this scale before. The Sugar Plant’s production area is around 15,000sqm and they claim it will employ about 10,000 people. Sunti Golden a subsidiary of Flourmills owns the Sugar Estate.
14. Milost Global announced last week that it was invested a whopping $250 million in Resort Savings & Loans Plc (RSL).
The investments comprise of a $100 million equity and $150 million in debts. Milost had revealed a few weeks back that it was on the verge of acquiring a major bank with branches around Nigeria, pointing many to believe it is Unity Bank.
Since RSL is not a major bank with many branches, there are strong indications that another major acquisition is in the offing. By our records, Milost has invested and announced that it will invest about $2 billion in Nigeria. That’s a staggering sum from a company that was relatively unknown until late last year.
Resort Savings in December last year, had notified stakeholders that it was in talks with a local investor to invest ₦8b in the bank. All we know is that Milost have close ties to the OOni
15. In a surprise move, the National Insurance Commission confirmed that it had taken over the management of Unic Insurance Plc to “reposition the company for better performance.”
The commission appointed an interim board to manage the affairs of Unic Plc for the next 6 months. This news was quite surprising because UNIC as far as we understand is basically a shell of a company.
Just last year South African financial services giant, Liberty Mutual bought 75% of the company in a deal that is reportedly worth $12 million. The acquisition led to the delisting of UNIC and in its place, a new company UNIC Diversified Holdings was formed.
Shareholders of the now delisted UNIC were to own 25% of the new Unic Diversified Holdings. It is unclear which of the entities NAICOM is taking over.
UNIC closed trading on Friday at 19 kobo and is one of the lowest priced stock on the exchange. UNIC’s case is particularly a sad one as this was a model Insurance company some years back.
They were on the forefront of the HMO business and had one of the best hospitals in Lagos, then located in Ikeja. However, years of mismanagement meant most of their employees resigned and left the company.
16. Last week, the Securities and Exchange Commission (SEC) announced that it had directed its forensic auditors to resume the probe into Oando’s financial statements.
SEC had suspended the audit after series of lawsuits by Oando and some shareholders of the company. However, Oando withdrew the lawsuit paving the way for Deloitte to commence a forensic audit. It appears however that some shareholders may have lost faith in the entire process.
Apparently, as SEC was announcing its decision to commence the audit, some minority shareholders of the company went to the press accusing SEC of Shielding Oando from a probe. Proactive Shareholders Association of Nigeria as they called themselves, wrote a petition calling for a “decisive action on the forensic audit of Oando.”
17. As the Nigerian aviation industry dithers, more African State-owned airlines are taking advantage to capture one of Africa’s largest markets. Rwanda Air reported last week that it has concluded plans to launch flights from its hub in Kigali into Abuja, Bamako in Mali, Conakry in Guinea and Cape Town in South Africa.
They are also looking at expanding their routes into New York and Guangzhou in China, two very popular Nigerian routes. Rwanda is perhaps the fastest growing airline in Africa and posses about 12 aircraft including 4 Boeing 737-800, 2 Boeing 737-700, Airbus A330-300 and A330-300 In their fleet.
Rwanda Air began in 2002. Imagine that Virgin Nigeria commenced operations in 2005 and ceased operations 7 years later in 2012.
- Dana Airline has finally caught the attention of authorities, this time the number one citizen of the country, President Buhari.
He ordered a full audit of the Dana Airlines following the recent near mishap the airline suffered at the Port Harcourt International Airport, Rivers State. Dana Airlines plane landing in Port Harcourt ends up in the bush. The same airline also had one of its doors fall off in Abuja whilst it overshot the runway days later in PH.
The investigation we understand will involve an assessment of the staff strength, technical capacity and general operations and that Government have already suspended the operational license of both pilots.
19. Private Jet lovers were treated to the all-new Gulfstream G500 business jet which made its first visit to Nigeria last week.
The Jet was on display at the Execujet Terminal of MMIA. They said that the “Gulfstream G500, for example, can fly 8,149 km at nine-10ths the speed of sound, easily carrying passengers from Lagos to London or Moscow. At Mach 0.85, the aircraft can travel 9,630 km, linking Lagos with Caracas or Mumbai.’’
20. The Nigerian Government announced on Sunday that it has increased excise duties on tobacco and alcohol. Minister of Finance Kemi Adeosun has had this plans in the pipeline as one of the government’s strategies to increase tax revenues.
According to a press release issued by the government, in addition to the 20% tax on tobacco, there will be an extra fixed tax on cigarettes. A stick cigarette will attract a ₦1 specific rate per stick (₦20 per pack of 20 sticks) in 2018, a ₦2 specific rate per stick (₦40 per pack of 20 sticks) in 2019 and ₦2.90k specific rate per stick (₦58 per pack of 20 sticks) in 2020.
The current ad valorem tax of 20% on cigarettes will, however, remain in place. Beer & Stout would attract ₦0.30 per centilitre (Cl) in 2018 and ₦0.35 per Cl each in 2019 and 2020. Wines would attract ₦1.25 per Cl in 2018 and ₦1.50 per Cl each in 2019 and 2020, while ₦1.50 per Cl was approved for Spirits in 2018, ₦1.75 per Cl in 2019 and ₦2.00 per Cl in 2020. The ad valorem tax on alcoholic beverages has however been removed.
The taxes commence on June 4, 2018. Critics believe in taking this decision, the government may not have fully considered the unique role Nigeria plays in attracting investments from tobacco and alcoholic firms.
Most of these companies consider Nigeria as a hub for exporting their products to neighbouring African countries. Imposing this new tax may jeopardize that advantage. Tobacco export is 12 on Nigeria’s list of largest exported goods.
NB Plc to raise additional N20 billion from its N100 billion Commercial Paper
Nigerian Breweries has announced the continuation of its N100 billion Commercial Paper (CP) Issuance Programme.
Nigerian Breweries has announced the continuation of its N100 billion Commercial Paper (CP) Issuance Programme in a bid to raise up to N20 billion to support its short term funding needs. The company has launched Series 9 and 10 of the programme for this purpose.
This information was disclosed in a notification signed by the Company’s Secretary, Uaboi G. Agbebaku, and sent to the Nigerian Stock Exchange.
The notification reads;
“[Nigerian Breweries Plc] is pleased to inform the Nigerian Stock Exchange and the investing public of the continuation of its “CP” (Commercial Paper) programme with the launch of Series 9 and 10 of the programme.
“Series 9 of the Commercial Paper programme would be for a tenor of 180 days, while Series 10 would be for 270 days. However, the launch of the CP opens today 23rd October 2020.”
What you should know
According to data obtained from Financial Market Dealers Quote (FMDQ), Nigerian Breweries has raised up to N90.12 billion since the start of the year.
- N52.76 billion was raised from Series 6 between February 12 to November 6, 2020.
- N13.03 billion was raised from Series 7 from April 15 to October 14, 2020.
- N24.33 billion was raised from Series 8 from April 15 to January 8, 2021.
- The recent issuance of the Series 9 and 10 CP will bring the total funds raised to N110.12 billion.
Why it matters
- The CP will help the company navigate through the recent impact of COVID-19 and other trade disruptions.
- The programme will strengthen the balance sheet of the company, and enable the brewer to execute its plans while delivering value to customers and creating wealth for shareholders,
- In like manner, the CP programme is expected to provide opportunities for non-equity investors to invest in the company and support its cost management initiatives.
MTN shareholders have made approximately N1 trillion since April 2020
Shareholders of MTN Nigeria gained close to a trillion naira in less than 7 months.
MTN Nigeria shareholders have gained N986.58 billion since the first trading session in April 2020.
This was uncovered by calculating the difference in the telecommunication giant’s market capitalization of ₦1.832 trillion at the open of trade, for the first trading session in the month of April 2020, and the market capitalization of ₦2.646 trillion at the close of trade in the first trading session in the month of October.
This gives a whopping N814 billion increase in market capitalization, and this with the dividend the company has paid to shareholders on two occasions between this time period, brings the total gains both realized and unrealized to approximately N1 trillion.
Hence, the N814 billion increase in market capitalization translates to the joint gains MTN investors have made from the increase in the shares of the company, as the share price of the company has increased by 44.44% or ₦40.00 between April 1, 2020, and October 2, 2020, with the share price of increasing from ₦90.00 to ₦130.00.
However, the gains MTN NG investors have made from their investments in the telecommunication company, is not limited to the gains driven by the increase in the price of the shares.
Recall that the company declared payment of dividends to its shareholders on two occasions, as investors/shareholders of the company, whose names appear in the Register of Members, as of the close of business on April 17, 2020 and August 14, 2020 were paid a cumulative dividend per share of ₦8.47, for all the outstanding shares of 20,354,513,050 held by the shareholders, and this translates to a total dividend payout of N171 billion by the company to its shareholders.
It is noteworthy that the realized and unrealized gains MTN investors have made from holding the shares over this period stands at N986.58 billion.
LASACO Assurance Plc Chairman, Aderinola Disu resigns from the Board of Directors
Aderinola Disu resigned her position as a Director on the Board of LASACO Assurance.
Lasaco Assurance Plc has announced the resignation of its former Chairman, Mrs. Aderinola Disu, as a Director on the Board. The resignation took effect from the 8th of September, 2020.
The following information is contained in a press release made available to the public, signed by the company Secretary, Gertrude Olutekunbi, and verified by Nairametrics.
The notification also revealed that, the aforementioned firm has received a provisional approval from the National Insurance Commission (NAICOM) to appoint two other directors.
The two newly appointed directors are; Dr (Mrs.) Maria Olateju Phillips, and Prince Jamiu Adio Saka, both appointed to a Non-Executive Director role.
Profile of the two newly appointed Directors
Chief (Mrs.) Teju Phillips, is a successful Chartered Accountant, who holds an ACCA from England and Wales. She is multilingual and has extensive experience in Management/Consultancy services, that spans across many years in both the public and private sectors. She has served as a Director in Keystone Bank; Director, Lagos State Lottery Board; Honorable Commissioner for Special Duties & Inter-Governmental Relations in Lagos State; Managing Director of Alma Beach Estate Ltd (a subsidiary of Rims Merchant Bank Ltd); Managing Director, Maridot Ventures Ltd. among others.
Prince Jamiu Adio Saka, is an accomplished Insurance professional, having practiced in Canada and Nigeria. He brings to the board over 30 years of experience as a Broker.
Lasaco Assurance Plc, is a listed Nigerian firm that provides life and general insurance services, which includes motor, bond, contractors-all-risk, fire, burglary, aviation, marine, general accident, life, pension schemes, engineering, and oil and gas. The company has a market capitalization of about N2.05 billion and it share price currently trades at N0.28 kobo.