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MTN to Overtake GTCO as Most Liquid Stock After Share Sale

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MTN Nigeria (MTNN) will see a surge in the number of retail shareholders after the completion of its share offer, which will make the telco giant the most liquid stock on the Nigeria Exchange Group (NGX), according to the latest report by Chapel Hill Denham.

The research house added that post transaction, MTNN will have a free float of N1.35 trillion, overtaking Guaranty Trust Holding Company as the most liquid stock.

Free float is generally described as all shares held by investors, other than restricted shares held by company insiders.

It does not include restricted shares, which are owned by company management, officers and other various insiders because it’s assumed that those shares are being held on a very long-term basis.

In news that elated investors, MTNN announced it planned to have over 2 million shareholders with its ongoing retail offer which had been approved by the Securities and Exchange Commission (SEC).

The public offer to retail investors for sale of up to 575 million shares held in MTN Nigeria by MTN Group will be priced at N169 per share (the offer).

The minimum subscription is for 20 shares and lots of 20 shares thereafter. The Offer includes an incentive in the form of 1 free share for every 20 shares purchased, subject to a maximum of 250 free shares per investor.

MTN Nigeria has a market capitalisation of N3.48 trillion, making it the second most capitalised stock on the NGX.

It is noteworthy that analysts are sanguine that the country’s propitiously auspicious young population that crave for data consumption and copious investment in 4G network combined with the increasing smartphone penetration makes the telco giant a must own stock.

Nigeria, which already has the most people in Africa, is projected to have more than 400 million people by 2050, double the number of today, according to a recent World Bank report.

Nigeria’s smartphone penetration rose 49 percent in 2020 from 16 percent in 2016, and smartphone penetration is expected to hit 78 percent by 2025, according to Chapel Hill Denham.

The research house’s forecasts point to a 2.4x expansion in the number of smartphones in Nigeria to 170 million by 2025.

As a result of consistent growth in revenue and cost efficiencies even amid inflationary pressures and foreign currency crisis, MTN Nigeria is able to make profit from its core operations as earnings, before, interest, taxation, depreciation, and amortalisation (EBITDA) margins increased to 52.60 percent in September 2021 from 51.02 percent as at September 2020.

EBITDA was up 27.40 percent in September to N634.51 billion in 2021 from N497.86 billion as at September 2020.

Interestingly, MTNN is efficient in generating returns on the investment it received from its shareholders. Return on average equity increased to 136.01 percent in September 2021 from 89.05 percent in the period under review.

Return on average asset followed the same growth trajectory as it rose to 14.46 percent in the period under review from 9.47 percent the previous year.

Despite fast tracking capital expenditure to deepen footprint in 4G network with a view to consolidating its share of the market, it generated a free cash flow of N422.57 billion over the past twelve months.

MTN Nigeria has lower leverage which now stands at 0.41x, which means it is not susceptible to financial risk, paving the way for it to secure more loans.

MTN Nigeria pays shareholders N1.22 trillion dividends in 10 years

Value investors often crave a dividend that magnifies their wealth.

MTNN has been rewarding shareholders from distributable profit. It has paid N1.22 trillion in dividends between 2011 and 2021, with a payout ratio of 80 percent, according to Chapel Hill Denham.

“It expects stronger dividends over the medium to long term as earnings rise. Interestingly, EPS has been stronger year on year since the fourth quarter of 2020,” said the analysts.

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