MTN is getting cold feet on its promised plans for an IPO in Nigeria

Africa’s largest telecoms operator, MTN may be slowing on plans to launch an initial public offering (IPO) in Nigeria.

After agreeing to the IPO as part of a $1.7 billion settlement of a protracted SIM card dispute two years ago, the South Africa-headquartered MTN is considering scrapping those plans citing “current market conditions,” Bloomberg reports.

The company is “exploring other options” rather than an IPO type of listing initially planned as the “Nigerian business would not get fair value under current market conditions,” according to the interview with Ralph Mupita, MTN’s chief financial officer. Rather than an IPO, MTN could pursue a listing by introduction in which existing shares are listed.

But the timing of MTN’s decision is controversial given its ongoing $10 billion legal battle with the Nigerian authorities who claim that it “illegally repatriated” $8.1 billion in profits and possibly owes $2 billion in taxes. If MTN pulls its IPO it would be damaging for the Nigerian government which would be seen to have overplayed its hand. MTN is one of Africa’s largest companies and it would give the Nigerian Stock Exchange a boost by MTN listing there.

The string of fines and clashes between MTN and the Nigerian government have been damaging for both sides.  It’s a tussle that’s been damning for MTN investors as its share price tanked by as much as 35% in the immediate aftermath of Nigerian government’s most recent claims. MTN has rejected Nigerian authorities’ claims and has taken the matter to court. Mupita told Bloomberg MTN is hoping for a speedy resolution “to deal with the overhang on our share and the concerns of shareholders about Nigeria’s investment climate for foreign companies.”

For Nigeria authorities, the troubles with MTN could confirm long-held suspicions from some international investors that Africa’s largest economy remains a tough place to do business and could discourage others.

While the MTN Nigeria IPO plans appear to be slowing or put on hold, MTN recently pulled off a landmark IPO in neighboring Ghana raising $237 million. But it well short of the company’s $745 million target. However, given Nigeria’s much larger economy and population, the company will likely raise much more in its largest market of some 60 million plus customers, more than three times the size of MTN Ghana.

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