MTN Nigeria has denied any wrongdoings regarding the sales of its shares which the telecommunications company listed on Thursday, May 16, 2019. Note that some of the company’s shareholders have since engaged in off-market trading which was limited to same stockbrokers.
“MTN Nigeria Communications Plc (MTNN) is aware of media reports that make a series of allegations about the listing of MTNN on the Nigerian Stock Exchange (NSE). These reports are incorrect and misleading.”
What happened: The shares of MTN Nigeria are currently scarce in the stock market. This has led to claims that investors are being shutout from taking up shares in the company. The fear was confirmed when shareholders of the company traded shares between themselves, making it impossible for stockbroking outfits to bid on behalf of their clients.
In the meantime, MTN Nigeria is not willing to issue new shares. This is why the company did not list by an IPO (initial public offer), which would have required it to make new shares available for new investors. The company says when the time is right, it will have a free float of about 35%.
MTN Nigeria’s stake division: MTN Group has 78.8%, Nigerian investors account for 19.4%, while other investors own 1.8% of the shares in MTN Nigeria.
No crime committed: MTN Nigeria listed on the Nigerian Stock Exchange by way of introduction. What this means is that only shareholders who are interested in putting their shares up for sale can do so. As confirmed by the NSE, no rule compels the shareholders of a listed company to tender their shares for trading; they can only be urged to make it available.
So, what’s the confusion? MTN Nigeria listed with a trading price of N90 per share and hours afterwards, the share price had risen by 10%, the minimum required by the NSE. It later closed the market with N108.90 per share.
When the shareholders engaged in off-market trading, the share price was fixed at N125 which is more than what it closed the market with last week Monday.
With the shares being the most-sought-after by investors on the NSE, it is understandable that interested investors or shareholders looking to increase their shares will be willing to pay more than the share price to get it.
About MTN Nigeria share price: According to MTN Nigeria, the valuation of the company was uncertain due to the outstanding case involving the Attorney General of the Federation. This made it difficult to determine a fair price for the company’s stock.
The associated risks and potential returns could not be fairly assessed and priced. As a result, and in the best interest of all shareholders.
So MTN Nigeria could have traded above its listing day share price but factored in its outstanding case which could impact the value of the telecoms company.