‘Democratizing Stocks’ – How Another MTN First Could Change the Stock Market
In 2019, MTN Nigeria became the first of the major telecommunications players to be listed on the Nigerian Stock Exchange, setting the bar high for others considering going public. Since its listing in May 2019, the MTN share price has at least doubled, trading above N191 in November 2021, up from N90 on the day it went live two years earlier.
Over the past 52 weeks, shares of MTN Nigeria have hit 209.9 per unit, posting a 133% increase since their IPO, beating both inflation and the devaluation of the naira by a mile.
MTN is used to many firsts in Nigeria – also in 2019 it became the first telecom operator to test the 5G network in Nigeria, and in a few months it would roll out the same to major cities in Nigeria.
Beyond its many firsts, MTN’s latest has the potential to change the stock market in Nigeria. From December 1 to 14, MTN will trade its shares with all interested Nigerians.
MTN is widely regarded as the second most valued company in Nigeria, behind Dangote Cement. Of the total shares of MTN Nigeria, approximately 79% is held by MTN Group.
However, the group is currently selling 14% of its stake to as many interested Nigerians, making it the biggest member of the exchange to make such an offer. As Karl Toriola, CEO of MTN Nigeria has said on several occasions, MTN Nigeria does not need quick funds, therefore, the offering of shares is not fundraising to support the results of MTN.
According to Toriola, the share offering is aimed at attracting more Nigerians aboard MTN.
“This is a Naija company, proud to be Naija, and we want it to be even more Naija, so that every eligible Nigerian can own a share,” he said during a roadshow.
His words have been proven, as we have confirmed that any Nigerian with a Bank Verification Number (BVN) can buy MTN shares for as little as N 3,380 on a mobile phone. TheCable explained how this can be done here.
HOW MTNN COULD CHANGE THE MARKET
In May 2019, just after MTN Nigeria (MTNN) was listed on the Nigerian Stock Exchange (NSE), which has now become the Nigerian Exchange Group (NGX), the exchange automatically added over 1.8 trillion naira, which corresponds to the valuation of MTN. at the time.
This is one of the biggest leaps forward in the Nigerian stock market in over a decade. Since then, MTN’s share price has doubled in about two years.
The implication of this is that MTN Nigeria in the space of two years has added up to 1.8 trillion naira to the market, pushing the Nigerian stock exchange much further on the world stage and across the continent.
As a testament to this influence, Bloomberg named Nigeria the best performing stock exchange in the world, showing a 50% gain at the end of 2020. The Lagos stock exchange closed with the highest points since December 2007, beating 92 other exchanges in the world.
However, MTN is advancing this influence by democratizing access to premium stocks on the Nigerian Stock Exchange. Using a publicly accessible app – native to millennials and millennials – means more young Nigerians, who were previously opposed to local ownership, are now entering the market.
Compared to its peers, the NGX has a long way to go. For example, the Johannesburg Stock Exchange (JSE) is valued at over $ 1 trillion in November 2021. NGX, on the other hand, has a market capitalization of less than $ 100 billion, leaving Nigeria with ample room for growth. .
According to a Credit Suisse report, since the start of 2020, the share of retail trade in global market activity has almost doubled to over 30%. This means that much more retailing is deepening financial activities in global markets. For Nigeria, much of that retailing has been spent trading cryptocurrency and buying foreign stocks.
Like The Wall Street Journal reported, Nigerians using Binance cryptocurrency app number around 11 million. This is a huge market of tech-savvy Nigerians who have the capacity to invest wherever they are sure to turn a profit.
MTN’s use of the Chapel Hill Denham PrimaryOffer app means that more retail investment can flow into the market, thus increasing the volume of trade. If 10 percent of that number enters the local stock market, it could translate into billions of dollars for the Nigerian stock exchange in the medium to long term. This is the change that MTN is igniting with this public offering.
According to the NGX, MTN Nigeria is the “first fully digital public offering in the Nigerian capital market”. This means that many more players, large and small, in Nigerian capital markets can harness the same model and allow more Nigerians, especially young Nigerians, to enter the market.
With many more companies following MTN’s steps, Nigeria could close the gap between its stock market and its peers across the world.