MTN to shed R2.4bn Nigeria stake?

Mergers, Acquisitions and Financial Results

Market speculation is that MTN could shed some of its MTN Nigeria shareholding, selling 3.5% of its shares to wealthy Nigerian nationals by January next year. MTN holds 82% of MTN Nigeria. A news report by Business Day Nigeria says a plan is in motion for the MTN Group to sell shares worth 121 billion naira (R2.24 billion) in a local empowerment deal.

The report, which is detailed in terms of the transaction, says the deal is being handled by Nigerian financial institution IBTC Chartered Bank. “The new investors will have up till January 2008 to pay up.” Individuals who want to take part in the deal will have to acquire a minimum of US$5 million worth of shares, while a corporate body has to purchase US$10 million worth of shares, it says.

The report says the IBTC Chartered Bank may also create a special purpose vehicle that will acquire a block amount of shares, and then resell these to Nigerians. Individuals would have to purchase a minimum of US$100,000 worth of shares, it says.

MTN was unable to respond to a media enquiry at the time of going to publication. However, a local financial analyst says based on MTN Nigeria's market capitalisation of R80 billion, 3.5% shareholding is so small MTN does not have to make a stock exchange announcement.

Last year, the MTN Group increased its shareholding in MTN Nigeria to 82.04%, in a US$349 million cash and shares transaction. MTN Group CEO Phuthuma Nhleko said the deal would enable minority shareholders to realise a portion of their investment in MTN Nigeria. The transaction is part of a process that is expected to enable a broader spectrum of Nigerians to participate in the company's performance, he said.

MarketWorks business advisor Steve Edwards says the rumoured deal could represent MTN's capitulation to pressure of extortion at an economic and political level.

“The continent is dominated by graft and corruption and it doesn't go away at that level. So it's entirely possible that MTN is under constant pressure of extortion, in which event, the Nigerian deal represents capitulation and the others will be queuing up soon.”