NCC Foresight In Forcing Telcos List At NSE Hailed
Experts have tipped the telecom sector as adequately primed to help Nigeria out of economic down turn occasioned by the impact of Covid-19 and the dipping oil prices.
The predictions are partly based on the foresight of the Nigerian Communications Commission (NCC) led by Professor Umar Danbatta in forcing MTN and Airtel to list their shares at the Nigerian stock exchange early 2019.
It is the view of experts that the listing by the two leading telecom companies coupled with Nigeria’s social media culture and data growths provide a springboard for the country on how to get out of the economic down turn post covid-19.
Globally fall in oil prices and the ongoing covid-19 pandemic are having serious impact on world economies.
The United Nations Trade and Development Agency (UNCTAD) put the cost of the outbreak to world economies at about US$2 trillion in 2020.
The slowdown in the global economy and lockdown in some countries, such as Italy, Spain and most Eurozone economies and beyond, as a result, COVID-19 has also taken its toll on the global demand for oil. The decline in oil demand is estimated to surpass the loss of nearly one million barrels per day during the 2007-08 recession. This is also coming at a time when two key players in the global oil industry – Russia and the OPEC cartel – are at loggerheads on the decision to cut output.
There are job losses in several countries including Nigeria that has recorded over 24,000 jobs cuts.
The country’s well known economic mainstay, the crude oil, which was predicated on 57 dollars per barrel for the 2020 budget has crashed to below 30 dollars per barrel. The International monetary fund, IMF has predicted there may be a global recession after the pandemic.
In the face of these very dire consequences on the global economy, Nigeria inclusive, the telecommunications industry has been tipped to balance the economy, post-COVID.
Experts are of the view that the telecom sector is projected to stay healthier than most other industries that have received heavier blows from the impact of the deadly disease, notwithstanding the predictions of Analysys Mason that global telecoms operators may suffer a decline of 3.4 per cent, equivalent to $40 billion in revenue in 2020 due to challenges stemming from the Covid-19 pandemic.
According to Nairametrics, the Nigerian telecoms sector provides a bright spot. Nairametrics’ based its view that the telecom sector will stay afloat after the pandemic is on three factors. They include investments made pre-COVID, social media culture and data surge.
Nairametric said “We note that Nigeria’s key telecommunications companies have invested heavily in internet infrastructure in a bid to improve 4GLTE coverage across the country. Furthermore, increased competition among the providers has forced bundle prices lower, making internet usage very attractive to the average Nigerian. In addition, increasing smartphone penetration, increasing digitisation of the Nigerian economy and a fledgling social media culture are among many factors driving internet penetration within the country”.
It continued in its forecast: “considering the COVID-19 pandemic ravaging the country which has led to movement restrictions in various states and with key population centres like Lagos and Abuja seeing its citizens forced to stay at home, we expect a surge in data usage among the populace.
“We consequently expect better numbers from the telecom companies in the months ahead. In light of this, we see key telecom stocks like MTNN and Airtel Africa as good defensive stocks in this pandemic. A defensive stock is a stock that provides consistent dividends and stable earnings regardless of the state of the overall stock market.
The analyses of Nairametrics points to the fact that the foresight of Prof Umar Danbatta, the Executive Vice Chairman of the Nigerian Communications Commission ( NCC) in exploiting the moment of MTN’s infraction to ask them to list is yielding dividends.
Chief executive officer, Internet Exchange Point of Nigeria (IXPN), Muhammed Rudman told reporters recently that the expected data surge in Internet traffic was noticed immediately the lockdown took effect in selected states.
Rudman said that Internet traffic has increased at least by 10 per cent every week. Investors’ favourite stocks.
Since the listing of its 20.35 billion share units worth N1.8 trillion on the Nigerian Stock Exchange (NSE), MTN Nigeria’s stock has been described as one of investors’ favourites at the Exchange.
MTN was the first company to list on the stock exchange on May 16, 2019 and has so far remained second most capitalised stock.
The leading Nigerian telco has joined other elite stocks such as Dangote Cement Plc, FBN Holdings Plc, Zenith International Bank Plc, Access Bank Plc, Lafarge Africa Plc, Seplat Petroleum Development Company Plc and United Bank for Africa Plc.
At the time of its listing the Chief Executive Officer of the NSE, Oscar Onyema, described MTN’s listing as a promising development in the country’s telecommunications sector and capable of encouraging other players in the sector to explore the different opportunities in the capital markets for raising long term capital.
He said then: “As a listing platform of choice, today’s listing will add to our bouquet of diverse investment offerings to the public. Having MTN Nigeria listed in our market is a testament of The Exchange’s commitment to building a dynamic and inclusive market and creating channels for sustainable investment.
“This listing will promote liquidity for MTN Nigeria, enhance its value and increase transparency, as our platform remains one of the best avenues for raising capital and enabling sustainable growth for national development”.
It should be recalled that MTN did not list at the stock market on its volition. It was as part of obligation mandated on it by the Nigerian Communications Commission (NCC), as atonement for SIM card registration infractions.
In October 2015, NCC imposed a fine of N1.04tn on MTN for irregular registration of 5.2 million subscribers.
However, after prolonged negotiation with both the regulatory agency and the Federal Government, the company had the fine reduced to N330bn. Public listing was one of the conditions arrived at with the telecommunications company before the Federal Government agreed to reduce the penalty to N330bn.
Telecom experts have described NCC’s role in MTN’s listing as unprecedented and creative; exploiting the then controversial situation to create investment opportunities for local and foreign investing communities. Seeing how stocks of listed telecoms companies are creating values for capital gains and wealth creation in the market, they are encouraging the Commission to make listing on NSE a precondition for issuing operating license to players in the telecoms industry.
