UPDATED: MTN Nigeria shares Climb 10% with Lagos Trading, targets local ownership at 35%

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By Paul Wallace

Wireless carrier becomes Nigeria’s 2nd-largest listed company

MTN to sell part of 79% stake in an IPO planned for later date

MTN Group Ltd.’s Nigerian unit shares jumped as they began trading in Lagos, a step toward a partial sale of a majority 79% stake owned by Africa’s largest wireless carrier.

MTN Nigeria Communications Plc rose 10% to 99 naira as of 2:19 p.m., giving it a market value of 2.01 trillion naira ($5.6 billion). That makes the mobile-phone company the second-biggest listed firm in Africa’s most populous country, behind only Dangote Cement Plc, the main asset of billionaire Aliko

Key Insights:
MTN agreed to an IPO of its Nigeria business as part of the settlement of a reduced $1 billion fine in the country in 2016. In a first step, Nigerian investors who previously bought and sold their shares occasionally over the counter can now trade over the Nigerian Stock Exchange. Later, MTN will add to the free float by selling down its majority stake.

Assigning a valuation to MTN Nigeria has been complex as the parent company is locked in a legal battle with Nigeria’s Attorney General over a $2 billion tax claim, the latest in a series of disputes in its biggest market.

The carrier appointed former Nigerian central bank Governor Lamido Sanusi, who’s now the Emir of Kano, as a non-executive director to help ease relations.
The shares started trading at 2:14 p.m, meaning the NSE’s newest member only had 16 minutes to trade before the market closed on Thursday.

With revenue of 282 billion naira in the first quarter, MTN Nigeria is the largest firm on the NSE by sales and the only mobile-phone company to be on the bourse.

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Also South Africa’s MTN Group sees local ownership of MTN Nigeria at 35% from around 20% after a public offering, its finance chief told investors in Lagos on Thursday, according to two of those investors.

MTN plans to proceed with the public offering following a listing in Africa’s biggest economy on Thursday and after it resolves a $2 billion tax dispute with Nigeria’s attorney general.

MTN Nigeria on Wednesday announced plans to start trading its existing shares in Lagos at 90 naira each on Thursday, in a deal valuing the unit at 1.84 trillion naira ($6 billion). This follows the South African telecoms group’s agreement with Nigerian regulators to settle the long-running dispute. Two investors who attended Thursday’s pre-listing meeting said MTN Group Chief Financial Officer Ralph Mupita presented an investment case for the Nigeria float where it would list 20.4 billion shares on the Nigerian Stock Exchange.

MTN Group owns 78.8% of the Nigerian business. Mupita told investors that the shareholding of MTN Nigeria after the public offer would be in line with that of other multinationals listed in Nigeria.

Reporting by Chijioke Ohuocha; editing by Paul Carsten and Emelia Sithole-Matarise

— With assistance by Renee Bonorchis

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