MTN Ghana makes history with first mobile money-based IPO

MTN Ghana, the largest telecom operator in Ghana opened a historic Initial Public Offering (IPO) in the country that will see it raise as much as US$743 million in fresh capital or an equivalent of N264 billion. The IPO is the largest ever undertaken by the country and if successful could set the stage for other companies to test the market.

The offer is being keenly watched by operators in the Nigerian capital market because its success could open room for Nigerian firms to look to the West African neighbour for their capital needs considering the dearth of IPOs in the Nigerian capital market, a situation that is expected to be remedied with an expected similar MTN Nigeria IPO later in the year.

But MTN Ghana IPO is also unique in that it is the first ever IPO globally on any stock exchange in which shares can be purchased through mobile money. This is being facilitated through the MTN Momo Wallet, a mobile money platform popular in Ghana where Telecom operators have been allowed to lead the mobile money revolution. This is unlike Nigeria, where mobile money platforms have failed to pick up largely because it is still a bank led model.

In the MTN Ghana IPO, all an investor has to do to buy units of the shares on offer is to ‘Dial *170 Hash” and follow the required instructions, and he will be able to purchase as many shares as he can afford with the cash stashed away on his MTN Momo Wallet. It is a unique mode of IPO that has ‘democratised’ the share offering process, a factor that would likely make the offer highly successful, say analysts.

The offer is open for nine weeks starting May 29 and closes on 31 July 2018. The MTN Ghana IPO is a pre-condition given to it by Ghanaian telecom regulators for the company’s acquisition of the 4GLite license.

The licence allows MTN Ghana to offer 4G LTE mobile internet services to its customers and is expected to improve the Company’s ability to offer its customers a high-speed data network and advance its competitive position in the market.

This launch reaffirms our commitment to Ghana and this fills us with a great sense of optimism,” Ebenezer Asante, CEO of MTN Ghana said.

The Offer comprises 4.6 billion ordinary shares representing 35 percent of MTN Ghana’s issued shares post Offer. However, up to 2.5 billion of the Shares will be new MTN Ghana Shares to be issued by MTN Ghana to the successful and qualifying applicants while another 2.2 billion Shares are from existing shareholders who are selling their shareholding to aspiring investors.

The MTN Ghana IPO is being closely followed by the Nigerian investment community because of the expected MTN Nigeria IPO, which is expected to follow a similar pattern. In statement released to the media on May 28, MTN Nigeria said that it is yet to set a date for the IPO but confirmed that the IPO process will be concluded in 2018.

Tinuade Awe, Executive Director at the NSE told BusinessDay recently that the Exchange is also planning to ensure retail investors are able to participate in the proposed MTN Nigeria IPO by subscribing to shares through the use of their mobile phones.

She disclosed that the exchange is working with the Nigerian Communication Commission to enable investors use of Unstructured Supplementary Service Data (USSD) to subscribe to the proposed MTN Nigeria IPO.

“MTN has expressed publicly an interest to list this year and what I can tell you is that the exchange is able, willing and ready to list the company this year. If MTN does not list, it will not be because of the Nigerian stock exchange as we are working on an electronic IPO platform that will ensure that the 150 million subscribers it has in the eco space, actively participate in the MTN listing,” Awe said.

“The idea is basically to give retail investors, who were hurt in the mid 2000 market crash an opportunity to come back to the market.”

With a market share of approximately 55.09 percent as at December 2017; MTN Ghana is the market leader in Ghana’s increasingly competitive mobile telecommunications industry, growing from a subscriber base of 8.7 million as at December 2010 to over 17.83 million as at December 2017.

MTN Ghana is expected to have a market capitalisation of about 10-billion cedi (N777 billion) post offer. The offer document shows that the firm forecasting that its revenue for 2018 will hit GHC4-billion (N311 billion) but rise consistently to GHC5.4-billion (N420 billion) in 2020.

The Ghana telecom firms net profit is expected to hit GHC 718-million (N55.8 billion) in 2018, but will rise to more than GHC1-billion (N77 billion) in 2020.

The Ghana stock Exchange has set the minimum amount to be raised for the offer to be considered successful and for the listing to proceed at GHC350-million (N27.2 billion) which represents about 10 percent of the total offer size. Allocation to foreign investors have been capped at five percent of the total shares on offer.

MTN Group, Africa’s biggest mobile phone operator, and parent company to both MTN Ghana and MTN Nigeria recorded 9.1 percent increase in its revenue for the first quarter of 2018 ended March 31 due to growth in Nigeria and Ghana, where voice revenue expanded.

The MTN Group cited MTN Nigeria’s stronger-than-expected growth in revenue as one of the major contributor that allowed the business to benefit from increased scale. “Group voice revenue growth of 5.4 percent benefited from strong growth in Nigeria and Ghana of 15.2 percent and 20.6 percent respectively. Group data revenue grew by 26.9 percent quarter –on-quarter, as we executed on our dual-data strategy, ensuring appropriate data coverage across our footprint,” Rob Shuter, MTN Group CEO, said.

The MTN Group has 217 million subscribers in 22 countries in Africa and the Middle East with operating subsidiaries and joint ventures in Afghanistan, Benin, Botswana, Cameroon, Cyprus, Ghana, Guinea Bissau, Guinea Republic, Iran, Ivory Coast, Liberia, Nigeria, Republic of Congo (Congo Brazzaville), Rwanda, South Africa, Sudan, South Sudan, Swaziland, Syria, Uganda, Yemen and Zambia.