When MTN Nigeria launched its Initial Public Offer (IPO) on December 01, 2021, a lot of Nigerians appear to be sitting on the fence asking whether it is a good buy or not.
At the Nairametrics Clubhouse show, On The Money series, investment and financial analysts explained that fundamentally, MTN is a solid company and a discerning investment decision for buyers.
They also confirmed that the company has grown astronomical since it started in 2001 and still maintaining its leading role in the telecoms sector.
What experts are saying about the offer
Wale Okunrinboye, an investment banker, noted that MTN as a company has strong figures and could make a good buy for retail investors.
He said, “Fundamentally, I think MTN is a solid company. It has grown astronomically since it started in 2001 and is dominating the telecom space. Its demand is inelastic as people always need to communicate and so the product will always be in demand. Also, you don’t have many players going into that space because the entry barriers are quite large.
“Also, in terms of growth prospect, asides from the increasing Nigerian population, there is also the increasing data consumption. Going forward, data consumption will increase even more as we go more digital. The revenue from data consumption continues to increase quarter after quarter.”
Ugochukwu Obi-Chukwu, Founder, Nairametrics, also pointed out that the steady returns on equity in form of dividends make the stock a good buy, and one that could pay off in the long term.
He said, “Another reason why MTN shares make a good buy right now is the upcoming venture into the financial space. Immediately the company announced that it had gotten an approval in principle from the Central Bank of Nigeria to operate a payment service bank, its share price shot up to 200 per unit.
“It is obvious that when MTN finally obtains the PSP license, the company would have opened another revenue stream and this could do more wonders for their already brilliant financials.”
“There is a lot about mobile money to be explored and we can see that from what the telecoms are doing in East Africa. In Nigeria for instance, there is quite a portion of people that are financially excluded people who are not keen on using the banks because of so many terms and conditions, and so on. The banks cannot reach those people and this will form another layer of revenue for MTN,” Okunrinboye added.
He added that Nigeria is still far from attaining the financial inclusion goal as many persons still do not have access to banking services, and the mobile money will reach more people than the conventional banks have been able to reach.
Why is the MTN prospectus not available to the general public?
What could be my gain in investing in it?