MTN Nigeria IPO to target $1bn proceeds after fine

2016-09-01 14:47 - Ambereen Choudhury, Manuel Baigorri and Dinesh Nair
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MTN. (Duncan Alfreds, Fin24)


Lagos - MTN Group [JSE:MTN], Africa’s biggest wireless operator by sales, and minority shareholders in its Nigerian business are seeking to raise about $1bn in an initial public offering, a condition tied to the settlement of a record fine imposed by the West African government, people familiar with the plan said.

Minority shareholders may sell down their holdings or exit entirely, while MTN may offer a small portion of its stake in the business, one of the people said, declining to be identified because the details are private.

The Johannesburg-based company is still fine-tuning any offer and no final decision has been made on the amount, the people said. MTN declined to comment.

The IPO is part of a deal struck with the Nigerian government to pay a 330 billion naira ($1 billion) penalty for missing a deadline to disconnect unregistered subscribers.

The negotiations over the fine, which has contributed to a 38% decline in MTN’s share price since it became public in October, cost R1.3bn in professional-service fees, according to the company.

Nigeria is MTN’s biggest money spinner, accounting for more than a third of its sales and profit for a company that has a market value on the Johannesburg bourse of R220bn ($15 billion).

Nigeria’s economic slump deepened in the second quarter as a declining oil industry weighed on output, with gross domestic product in Africa’s most populous country contracting by 2.1% from a year earlier, after shrinking 0.4% in the first quarter.

The Nigerian Stock Exchange All Share Index has slumped 7% over the past year as a currency peg that lasted about 16 months deterred foreign investors, weighed on growth and led to a lack of dollars, curbing imports and causing shortages from fuel to industrial materials.

MTN said in July that it hired Citigroup and Standard Bank Group as advisers on the transaction.

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