Skip to main content

What Nigerians Can Benefit From MTN Listing On The Nigerian Stock Exchange



Nigeria and Africa’s largest mobile network, MTN revealed this week that it was going to list on the Nigerian Stock Exchange sometimes in 2017. The news was welcomed by a lot of Nigerians considering the impact this will have on investments in Nigeria.

To get a sense of how big deal this could be, MTN Group is currently valued at about $18 billion. MTN Nigeria is said to contribute about 40% of the group’s profits, thus one can infer that MTN Nigeria could be worth about $7.2 billion. The Nigerian Stock Exchange on the other hand is valued at about $32 billion. Based on our back of the envelope calculation, MTN listing on the Nigerian Stock Exchange will increase the NSE market value by about 22%.

But that’s not all there is to the effect of a possible listing of MTN on the Nigerian Stock Exchange. In this article, I will sought to highlight what benefits there could be for Nigerians from a potential listing of MTN on the Nigerian Stock Exchange.

Capital Gains – One of the major reason why people invest in shares is for capital gains. Capital gains are recorded whenever the share price of a stock appreciates over how much you paid when you bought it. MTN being a highly profitable company is likely to record capital gains more often than not. At the time of writing this article, MTN share price had lost (Capital loss) 22% in the last one year. However, it has gained 5% between January and today. One of the reasons why MTN has lost this much in value is mostly due to the fine imposed on it by the Nigerian Government. However, analysts believe the company will recover from this loss. In fact, MTN has over the last 5 years gained about 117% (before the fine was imposed).

Dividends – One of the rewards for being a shareholder of a company is also receiving dividends. Dividends can be paid via cash or via a script issue of shares for free). MTN has paid dividends every year since 2004 according to records from its website. A consistently paying dividend company, means the company is profit-making and shares part of that profit to its shareholders. Long term fundamental investors prefer dividend paying companies because it is a measure of how tenacious they are at making profits while growing the business. MTN’s track record of paying dividends will be of immense benefit to Nigerians who love dividend paying companies.

Pension  Funds– Pension funds in Nigeria are one of the most sought after investors due to their size and quantum of investable funds. Investors therefore use their indexes for determining where they put their money. However, the Nigerian Pension Acts provides conditions for Pension funds to invest in. The conditions are that the company must have dividends at least 1 on 5 years and must be profitable 3 out of 5 years. MTN Group easily meets these criteria in South Africa, even though it is yet to be listed in Nigeria. The benefits for your pension fund assets are also significant as PFA’s not have a big, proven and reliable company that they can invest in.
              
Tax for government – The Federal Government also gains immensely by attracting MTN to invest in Nigeria via taxes. Nigeria currently does not tax capital gains made from the sale of shares, however it does places a 10% withholding tax on dividends paid by companies. It also charges a 5% VAT on commission and fees paid to stockbrokers when shares are bought and sold. A company the size of MTN will contribute immensely to the government’s tax revenue if it eventually lists.
Join our BBM channel for instant updates : C0030863D

Comments

Post a Comment

Popular posts from this blog

BOOM: Nigeria’s External Reserves Drops To Lowest In 11 Years

Nigeria’s foreign exchange reserve fell to $25,780,765,483 (25.78 billion) as of August 16, the lowest we have seen since 2005. The drop was down 2.11% from a month ago. The Nations external reserves dropped below $26 billion for the first time on the 5th of August 2016 after it closed at about $25,971,610,949. In fact, the external reserves has dropped by about $480 million dollars in August alone compared to just $100 million in the whole of July. Ironically, the current balance of $25.9 billion is worth about 80% more than what it was in Naira following the depreciation of the naira after it was floated. The CBN has in the past few days ramped up sales of dollars at the interbank in the hope that it will create liquidity in a market that is yawning gape to swallow forex after nearly almost two years of intense rationing by the CBN. The Naira weakened to its lowest ever at the interbank after it closed at about N362.5/$1 in midday trading. The Naira will eventua...
Post a Comment
Read more

Emefiele gives insight, on what to Expect during his second term

The newly re-appointed Governor of the Central Bank of Nigeria, Godwin Emefiele, over the weekend enumerated the things intends to accomplish during his second term in office. Emefiele enumerated his plans while speaking to journalists at the University of Nigeria Nsukka (UNN), on the sidelines of the institution’s Special Convocation which took place on Friday. The CBN Governor gave delivered a lecture at the event. Driving down inflation: According to Emefiele, he intends to focus on policies that would drive down the country’s inflation rate, improve price stability, and drive economic growth. Emefiele’s Stern Warning: The CBN Governor further disclosed that he plans to work with his team to drive down imports and encourage exports. He also used the occasion to issue a stern warning to those who meddle with policies aimed at achieving economic stability, telling them that they will be caught and punished by law. Mr Emefiele’s second term plans came just a few days after ...
Post a Comment
Read more

Gas Alone Cannot Achieve increase in Power Sector – Fashola

The Minister of Power, Works and Housing, Babatunde Fashola , on Thursday said in Lagos that gas alone could not bring the much needed increase in power supply in the country. Fashola spoke as guest speaker through Chinedu Ugbo , acting Chairman, Niger Delta Power Holding Company (NDPHC), at the 2016 Annual Conference of the National Association of Energy Correspondents in Lagos. The News Agency of Nigeria (NAN) reports that the theme of the conference is entitled: “Low oil price: Impact and the way forward” . Fashola said, “It is not gas alone that will allow us to achieve incremental power”. “It is our most reliable source of power, yes, but it is only one solution among many other underutilised solutions. Mambila Power Station, for example, is likely to be our most defining in the road to incremental power, situated in Taraba State. It will potentially add 3,000MW to the grid and yet this is a hydro-electric project, not gas. Our ministry has recently publicis...
Post a Comment
Read more