Are MTN Nigeria Shares Worth Buying?

Good morning and how are you doing? Welcome to this week’s edition of 4 Customs Street, our weekly newsletter on the stock market.?

Star-Spangled Banner Last Week?

Last week was a positive one for US stocks. The three key indexes which measure the average performance closed positively. The S&P 500 gained 3.82%. The Dow gained 4.02%. The NASDAQ composite gained 3.61%.??

Surprisingly, the market was not shaken by inflation numbers for the month of November which came in at 6.8% year-on-year (November 2021 compared to November 2020).?

Star-Spangled Banner This Week?

It is a fairly quiet week in terms of earnings. Rivian Automotive, FedEx, and Adobe will drop their earnings during the week.?

Away from stocks, all eyes will be on the Fed Chair Jerome Powell as the Federal Reserve meets this week. The investing community would be keen on knowing his thoughts on the inflation numbers and watching out for any signs of the rise in interest rates.?

Green White Green Last Week?

This week was a blue one on the bourse as the All-Share Index fell by 0.68%. The index measures the average performance of stocks on the exchange. Some stocks will do better than the index. Some stocks will do worse than the index.?

Meyer was the best performing stock this week. It gained 50% opening at ?0.22 and closing at ?0.33, up ?0.11.

Unity Bank led this week’s losers. It fell by 15.69% opening at ?0.51 and closing at ?0.43, down ?0.08.?

Green White Green This Week?

Access Bank will be holding a Court-Ordered Meeting (COM) on December 16. The agenda is to seek shareholders' approval to transmute to a holding company (Holdco) structure.?

MTN Nigeria's public offer is scheduled to close at 5pm on Tuesday, December 14, 2021.?

Permit us to break protocol for once this week. We have been asked loads of questions about the ongoing MTN public offer. What exactly is happening?? Is it worth investing in? How can one invest??

We will take each question one after the other. Then go into the stock itself.?

The offer

The MTN Group (which is the largest shareholder in MTN Nigeria) is selling 575 million shares to retail investors through a public offer at ?169.?

The minimum number of shares you can buy is 20 shares, and thereafter you can buy in multiples of 20.?

For every 20 shares you buy, you get 1 free share, subject to a maximum of 250 free shares per person. To qualify for the free shares, one would have to hold the shares bought for at least a year, after they have been allotted.?

Who are retail investors? You and I. Investors other than large organisations or businesses. The next question we have asked is why are they selling.

The MTN Group currently owns about 76% of MTN Nigeria. Selling a bit of what they own makes the stock more liquid. Simply put, that means how easy one can buy or sell shares of a company without rocking the share price.?

How well has MTN Nigeria performed?

Statistics from the Nigerian Communications Commission (NCC) show MTN Nigeria had 75.7 million subscribers, which amounts to 39.2% of the entire telco space. GSM is the dominant telco operation in the country. It accounts for nearly 100% of all subscribers.

Revenue wise, the company has also done quite well. MTN Nigeria is one of a handful of companies on the Nigerian Stock Exchange that gross over ?1 trillion in revenue annually.?

For 9M 2021 (the nine-month period from January 2021 to September 2021), it made ?1.2 trillion in revenue and ?220 billion as profit after tax.?

Aside from voice and data, MTN Nigeria is also playing in the financial services space. The Central Bank of Nigeria (CBN) has given the firm approval for a superagent license and preliminary approval for a? payment service bank license respectively.

Beyond all the “big big” numbers, what have MTN Nigeria shareholders gained since listing??

MTN Nigeria listed at ?90 in 2019. The stock closed at? ?174.50 on Friday. Shareholders that have held the shares since then have made a 94% return on their investment excluding dividends till date.?

MTN Nigeria has paid dividends to shareholders since listing.

In 2019, it paid a total of ?5.72 in dividends per share

In 2020, it paid ?9.40 in total as dividends per share.

In August this year, it declared an interim dividend of ?4.55.?

An interim dividend is one that is paid before the end of a company’s financial year. MTN Nigeria’s financial year ends in December. That means investors should expect a final dividend sometime in Q1 or Q2 2022.?

Thus, from an industry perspective as well as a company perspective, MTN Nigeria is in a solid space.?

If you are interested in taking part in the offer, you can download the primary offer app by NGX from www.primaryofferng.com

If you don't have a stockbroker, you can choose WSTC securities limited as your preferred stockbroker.

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