November 22, 2011
*Total market capitalisation currently N6.3 trillion
Asset valuation and investment experts yesterday, told BusinessDay that if policy makers moved today to compel giant telecommunication companies MTN, Airtel, Glo and Etisalat to list on the Nigerian Stock Exchange (NSE), the Nigerian capital market could grow immediately by N6.13 trillion.
Pressure has being mounting on the authorities to force the listing of the companies if they are serious about deepening the capital market and spreading the ownership of the telcos operating in the country.
A valuation by experts in one of the foremost investment firms in the country, estimates the market capitalisation of MTN Nigeria at N2.1 trillion. MTN Group, parent company of the Nigerian arm, currently trades on over-the -counter in South Africa at $20 per stock with about 2 million shares on issue.
Airtel’s market capitalisation is estimated at N1.54 trillion; Globacom N1.69 trillion and N0.8 trillion for Etisalat, if listed in Nigeria, meaning that a total of N6.13 trillion would be added to the market. At present, the total market capitalisation stands at N6.3 trillion. The public listing of these to bring total market capitalisation to N12.43 trillion.
MTN listed in South Africa, has a market capitalisation of $26.6 billion and reported revenue of 111.9 billion rand ($15 billion) in the year to end-December, 2010.
The Group’s financial results show total revenues globally for 2010 stood of N2.57 trillion (115 billion rand) while earnings before interest, taxes, depreciation and amortisation (EBIDTA) stood at N1.07 trillion (48 billion rand).
A break-down of the Group’s results show that MTN Nigeria, which remains its biggest operations, made total revenues of N749 billion in 2010, 29% of the Group’s total revenues in 2010, while EBITDA for MTN Nigeria was N473 billion, 41% of the Group’s total EBITDA.
The coming of the telecommunication firms will complement Dangote Cement N2.1 trillion market capitalisation, which is about 37% of total market capitalisation at the close of the market in 2010.
With only 194 stocks trading in the equities, the market is said to be shallow. The listing of these telcos is expected to deepen the market and enhance liquidity.
Analysts believe that the projected $1trillion market capitalisation by 2016 would be realised when telecoms and oil & gas companies are brought to the market.
Rasheed Ola-Yussuff, chairman, Association of Stockbroking Houses of Nigeria (ASHON) said the listing of telecom companies will be a “positive development that will deepen the market.”
According to Abiola Rasaq, an analyst at Vetiva Capital , “it is broadly logical to expect an increase in activity, as the track record and prospects of such blue chips are expected to attract global investors with implications for funds flows”. MTN recently successfully floated private placement which has been trading Over-The-Counter (OTC) since the offering.
‘One of the likely attractions to these names will be the track record corporate governance, a phenomenon which foreign investors are wary of in emerging markets like Nigeria,” Rasaq further told BusinessDay.
The managing director of Cowry Assets, Johnson Chukwu said with such listing of the shares on the stock exchange, the organisations which have been operating in secrecy will not only have the obligation of submitting their reports to the exchange, but their corporate governance management will be enhanced.