Telecom operator MTN is considering cancelling its plans to initiate an initial public offering citing current market conditions.
It can be recalled that just two years ago, the South Africa based company agreed to the IPO as part of a $1.7 billion settlement of a protracted SIM card dispute.
According to Ralph Mupita, MTN’s chief financial officer, The company is “exploring other options” rather than an IPO type of listing initially planned as the “Nigerian business would not get fair value under current market conditions.” In the place of an IPO, MTN could pursue a listing by introduction in which existing shares are listed.
According to Quartz Africa, the timing of MTN’s decision is controversial given its ongoing $10 billion legal battle with the Nigerian authorities who claim that it “illegally repatriated” $8.1 billion in profits and possibly owes $2 billion in taxes. If MTN pulls its IPO it would be damaging for the Nigerian government which would be seen to have overplayed its hand. MTN is one of Africa’s largest companies and it would give the Nigerian Stock Exchange a boost by MTN listing there.
The series of clashes between MTN and the Nigerian government have been detrimental for both sides. The clashes however have been fatal for stakeholders in MTN as its share price tanked by as much as 35% in the immediate aftermath of Nigerian government’s most recent claims. However, the Telecom Giant has rejected Nigerian authorities’ claims and has taken the matter to court.
Mupita in an interview with Bloomberg disclosed that MTN is hoping for a speedy resolution “to deal with the overhang on our share and the concerns of shareholders about Nigeria’s investment climate for foreign companies.”
Sadly, as part of consequences for the Nigeria authorities, the current fracas could deter international investors from doing business in Africa’s largest economy seeing it as a harsh terrain for doing business.
Only recently, MTN launched a monumental IPO in Ghana raising $237 million. However, according to reports it is far from the company’s $745 million target which can be pulled off in Nigeria considering its economy and population. It is worth knowing that MTN boasts of about 60 million customers in Nigeria.