While MTN Nigeria’s IPO will put more spotlight on other listed tech companies, it won’t do much for them unless they become more disruptive.
MTN Nigeria is all set to debut on the Nigerian Stock Exchange in what would be the largest IPO ever in Nigerian stock market history.
The telecom company is slated to list on the bourse by Thursday, May 16, 2019 with over 20 billion ordinary shares registered with industry regulator, the Securities and Exchange Commission (SEC). According to recent news reports, MTN Nigeria shares could trade for at least N90 per share.
That figure gives MTN an incredible pre-IPO valuation of N1.831 trillion. At that valuation, MTN Nigeria would automatically be the second most valuable company on the Nigerian Stock Exchange behind Dangote Cement (at N3 trillion).
When it IPOs, MTN Nigeria, will join Dangote Cement and Nestle Nigeria with valuations of over N1 trillion.
But there’s another insights yet to be talked about. MTN Nigeria will be classified as a technology stock when it hits the bourse. But the telco shares will stand lika a colossus in comparison with stocks of other tech companies.
Presently, there are seven technology companies trading on the Nigerian stock exchange. These include CWG PLC (CWG), Omatek (OMATEK), Courtville (COURTVILLE), Tripple Gee and Company (TRIPPLEG), Chams PLC (CHAMS), E-Tranzact (ETRANZACT), and NCR PLC (NCR).
But at least four of these companies are currently trading as penny stocks (below N1 per share). These include Chams (N0.33), Courtville (N0.26), Omatek (N0.5) and Tripple Gee (N0.7). And according to one report, four of the seven technology listed companies have seen their prices fall below their IPO levels.
Combined, these seven companies have a market value of around N21 billion. That’s a tiny fraction of the gigantic N1.8 trillion valuation which MTN Nigeria’s IPO will attract.
Though some of these companies like CWG actually earn relatively high revenues, stock analysts rarely give them positive views.
As much as the MTN IPO could put a bit more spotlight on the ICT stocks, it’s no guarantee that their prices will appreciate.
To attract more investors and in turn perform better on the stock market, these companies will need to up their game, be more vocal about their business operations and develop more disruptive technologies.
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