MTN Nigeria Wakes Up Naija Public Markets

• MTN Nigeria plans to raise $500M in its IPO
• In Q1 2018 MTN Nigeria secured $88.6M in revenue

African telecom giant MTN (MTN:SJ +0.78%) plans to raise $500 million by listing its Nigeria unit on the country’s stock exchange this July. The IPO is part of an agreement the company entered into with the Nigerian government. The agreement included a $1.7 billion fine levied on MTN for failing to disconnect 5.1 million unregistered users. Will this IPO open the floodgates for more Nigerian companies to go public?

Why This Matters: MTN Nigeria would be the first company to go public in the country since the 2015 IPO of Transcorp, a conglomerate with businesses in the energy and hospitality industries. The company initially planned to hold its IPO in 2017 but decided to postpone the listing due to the Nigerian economy still being in recovery mode. This looks to have been a good call as they had a very strong performance in the first quarter of 2018 pulling in $88.6 million in revenue. If the company keeps up this pace, it will clear the $224 million it made in 2017.

MTN Nigeria dominates the country’s telecoms industry. The company commands 57% of the market in Nigeria. This dominance took a hit once regulators levied a record $5.1 billion fine which MTN eventually negotiated down to $1.7 billion. As part of the company’s agreement with regulators, MTN Nigeria began planning to list itself on the stock exchange.

A successful IPO would value MTN Nigeria at over $2 billion. That could spur other companies to list on the Nigeria Stock Exchange. “We expect to see activity pick up in the equity capital markets as Nigeria continues to emerge from the recession and companies execute on plans postponed since 2015 due to economic uncertainty,” according to a report from PwC.

Situational Awareness: MTN Nigeria is still paying off the fine it owes the government for failing to disconnect unregistered users, which Former U.S. Attorney General Eric Holder helped it negotiate with regulators.

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