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CAPE TOWN – MTN Nigeria Communications’ conversion to a public company from a private company yesterday represented the first step towards a listing in that country, telecoms analysts said.

On its own, though, the prospects of listing in Nigeria were not sufficient to have consistently driven MTN Group's share price higher recently. The share has risen 36.1percent over 48 days, from R76.06 per share on March 6 this year, to close 2.40percent lower at R102.25 on the JSE yesterday.

“This is a key milestone in the preparatory process for MTN’s listing by introduction on the Nigerian Stock Exchange,” the group said in a statement. Its chief executive, Ferdi Moolman, previously indicated that it planned to list in Nigeria in the first half of 2019.

MTN Nigeria holds the group’s biggest subscriber base, and in 2018, Nigeria’s 60million subscribers generated 30percent of the group's R125billion revenue.

Avior Capital telecommunications analyst Ruhan du Plessis said much of the recent upward movement in MTN’s share price had followed the release of MTN’s annual results in March, and the “good news” that had come out in those results about its plans for the future, including the selling of non-core assets and localisation.

“The uptick in share price has also been driven to some extent by the successful West Africa Jumia internet platform listing in New York, earlier this month.”

Du Plessis said the listing had provided a definitive value to MTN’s 20percent stake in Jumia, which shareholders had not placed a value on previously and now had to value into MTN’s share price. In addition, MTN has said it will sell the stake in Jumia at about the same time as the listing in Lagos.

The listing - a move the carrier agreed to as part of a $1bn (R14.23bn) regulatory fine in 2016 - is likely to be done in two stages, with an introductory listing in the first half of this year, followed by a sell-down of its majority 80percent stake at a later stage.

Du Plessis said he expected MTN might announce details of a roll-out of a mobile money plan for Nigeria soon after the listing.

Considering that MTN has some 60million subscribers out of a total population of 200million, and that this was Africa's biggest telecoms market, the mobile money roll-out represents significant opportunity for the group, he said.

He said MTN’s existing investors were also likely to welcome the Nigerian listing, because there had been complaints among them in the past that the Nigerian operations represented too big a risk, considering its size, to the entire group operations. MTN operates in 20 countries.

Telecoms analyst Irnest Kaplan said the listing in Nigeria might represent some risk for local shareholders, particularly as it related to the valuation of MTN Nigeria's assets.

He said typically the value of the unlisted operations in the MTN group's statements was done by the directors and what they assumed was an appropriate value for those assets.

It was possible that local investors in Nigeria might ascribe a lower value to the Nigerian assets than, for example, what investors on the JSE were valuing the assets at, and perhaps compared with global investors, who might value the assets much higher.

Kaplan said the growth of the South African cellphone market, in terms of subscriber numbers, was “saturated”, but other African markets, where smartphone penetration was still quite low, were growing “nicely”.

“There is no other device more attached to humans than cellphones. I don't know what the answer is, but it is out there,” Kaplan said.

MTN had not responded to Business Report’s questions by the time of going to press yesterday.

BUSINESS REPORT