Ahead of Initial Public Offering (IPO), MTN Nigeria sees a bright future

MTN Nigeria Limited is expected to unveil its Initial Public Offering (IPO) in just a few months. Ahead of the occasion, the company is forecasting good times; perhaps as part of plans to entice potential investors. The company’s recent Pre-IPO presentation forecasts five consecutive years of “strong financial performance”.

MTN forecasts that its revenue will grow over the next five years due to an expected upsurge in user base. The presentation cited Nigeria’s population growth and mobile penetration as the main reasons behind the forecast.

MTN also expects that Average Revenue per User will increase, thereby, leading to increased data usage.

Dissecting MTN’s forecasts

Without a doubt, MTN Nigeria Limited is one of the biggest telcos in Nigeria. It controls an estimated 57% market share in the Nigerian telecoms market. 

The company is also the biggest subsidiary of the MTN group which has earned as much as ₦249 billion in the first quarter of 2018, as against ₦218 year on year. This represents a 15% increase.

In Q1 2018, MTN Nigeria also recorded an Adjusted Cashflow Margin of 19% as against 16% for the full year ended December 31st, 2017. This shows that the company is capable of converting sales to cash.

MTN Nigeria is also reportedly valued at about $10.88 billion, which is a lot of money from all indications.

Despite these impressive figures, the company cannot afford to disregard its competitors in the market. Agreed, 9mobile may not present much of a challenge considering its seemingly endless troubles. But there is no gainsaying the fact that Globacom and Airtel are definitely two strong competitors which MTN must be wary of at all times.

It is important to point out that even though MTN Nigeria is reliable and offers what can arguably be adjudged the best telecoms services in the country, its users have often complained about the high cost of said services; particularly data. This is, therefore, something it may consider revising, even as it targets more users in the coming years.

In the meantime, MTN Nigeria has continued to progress with its pre-IPO preparations by engaging the capital market stakeholders; including the Nigerian Stock Exchange and the Securities and Exchange Commission.

Recall that the company was in 2015 fined the sum of ₦330 billion by the Nigerian Communications Commission due to the uncovering of evidence linking them to wrongdoing and abuse of operational guidelines; including the irregular registration of users.

The company has since paid about ₦165 billion. Meanwhile, some of the funds realised from the Initial Public Offering, which is slated for later this year, will be used to pay off the remaining balance of the fine.