Mixed reactions trail calls for telcos listing

The renewed calls for telecommunications companies in Nigeria to be listed on the Nigerian Stock Exchange; ostensibly to boost capital market operations, is receiving divergent views from stakeholders. KUNLE AZEEZ reports.

A renewed call has been made by stakeholders on the need to encourage telecommunications companies and other Information Technology firms operating in Nigeria to be listed on the Nigerian Stock Exchange. This, it is believed, will help in improving the vibrancy of the capital market, whose performance in recent years, experts say, has been below expectation.

Though, the call for the listing of telecoms firms on the stock exchange has always been made by stakeholders outside telecoms industry, especially those in doing businesses on the bourse, this time around, the call was ignited by the Minister of Communications Technology, Mrs. Omobola Johnson. Johnson, while making the call at a forum organised by the Nigerian Stock Exchange stressed that companies have a lot to gain from getting listed on the Exchange including companies in the telecoms and IT industry.

In her argument, Johnson said Nigeria’s telecoms sector is the fastest growing sector of the Nigerian economy for the last five years, with year-on-year growth at an average of 22- 23 per cent and contributing 8.3 per cent to Gross Domestic Product, GDP, as at the second quarter of 2013. According to her, it is, therefore, appropriate that many more Nigerians should benefit from this success through the increased public ownership of the companies, stressing that this can only when they are listed on the stock exchange.

Speaking in the same vein at the forum, the Coordinating Minister of the Economy, Mrs. Ngozi Okonjo-Iweala, credited the telecoms sector for contributing to GDP, creating jobs and enabling innovation. She, however, urged telecoms companies to get listed on the Stock Exchange to make Nigerians active participants in the success of Nigeria’s telecommunications revolution.

Over the years, there has been a call for more companies especially those operating in the telecoms sector to get listed on the Stock Exchange to further deepen the capital markets, ensure the long-term sustainability and engender the survival of Nigerian companies beyond their original founders and enhance transparency and corporate governance of companies operating in Nigeria. However, stakeholders have continued to express mixed reactions on the renewed calls by the ministers.

The President, Chartered Institute of Stockbrokers, Mr. Ariyo Olushekun, said that the move should be encouraged; saying listing of telecoms firms on the Nigerian Stock Exchange would be beneficial to all stakeholders in the country, including the listed companies. He argues that it was an “error” on the part of the Federal Government to have issued the telecoms licences without insisting that the firms put measures in place to list their shares in the capital market.

According to him, “There are companies that are very important to the economy. When government gave out licences to telecommunications firms, government made an error by not insisting that they get listed after some time. That is an error that we should not allow to repeat itself. “Many of the telecommunication firms will have to renew their licences any time soon. We have an opportunity at that point. Even if it is a small per cent of their shares, they should be listed. We also have opportunity with the energy companies.”

Also speaking with National Mirror on the development, a shareholder, Mr. Wahab Ajani, submits: “This has been an ongoing issue for the past few years. It is something we are all waiting for as Nigerians.

Getting telecoms operators listed in Nigeria will boost the economy and the capital market growth would also be increased.” He believes that telecoms firms would also benefit from such move by having “access to cheap funds to run their business and build their network, which is highly capital intensive.” A capital market analyst, Mr. Oladipo Aina’s view is not different from those expressed by Olushekuna and Ajani.

According to Aina, “One thing that the listing of telecoms firms would bring is increased corporate governance and transparency in their operations since they will now have to disclose all their business activities rather than the current situation where they only report to themselves, yet they are making a lot of money from this economy.” Speaking in the same vein, President, National Association of Telecoms Subscribers, NATCOMS, Mr. Deolu Ogunbanjo, said the listing of telecoms firms was long overdue.

According to him, “Though there is no Act mandating the operators to go public in Nigeria, we want to enjoin the telecoms firms to go public. Nigerians want to invest in them so that we can share the success of the sector which directly and indirectly, all of us have contributed to build in the last 13 years.

“If telecoms firms believe in their networks to go public, why not? They will have enough money to deploy more infrastructures and, by extension, to boost quality of services telecoms consumers.”

However, telecoms operators have rebuffed the calls to list their companies on the stock exchange in Nigeria, saying they were not under compulsion to be listed on the bourse. Speaking through their umbrella body, the Association of Licensed Telecommunications Operators of Nigeria (ALTON), the telecoms firms said there was no ground for compelling telecoms operators to sell shares to Nigerians.

ALTON President, Mr. Gbenga Adebayo, recalled that the last year, the country’s lower legislative chamber, the House of Representatives was being prodded to enact a law that will compel the operators to list their companies.

The House of Representatives Committee on Capital Market had, in 2012, insisted that the Global System for Mobile communications (GSM) operators-MTN, Globacom, Airtel and Etisalat-and the oil companies should be made to sell shares to Nigerians on the floor of the nation’s stock exchange.

“But our position then was that the decision to sell telecoms shares to Nigerians should not be subjected to a legislative enforcement, but should be the commercial decision of the telcos concerned to get listed in the nation’s bourse or remain as a limited liability company,” Adebayo said.

He said: “There is no ground to compel operators to list their shares on the NSE. It is unheard of. The world over, such a decision is purely commercial and I don’t think it should be subjected to legislative debate in order not to discourage foreign direct investment into the country. We have never heard that any telco has been compelled to sell shares in their countries of operations.

“We don’t believe that because of the perception that telecoms operators are making huge profits, they should be mandated to be listed on the stock exchange, without taking into cognisance the fact that they also spend a large chunk of their profit in network expansion and infrastructure roll out, with attendant challenges on an economy such as Nigeria. “ALTON strongly stood against the House of Representatives Bill on Telecommunications (Equity) (HB173) in 2009.

This bill set to mandate shareholding in telecommunications companies. Our position was submitted to the Nigerian Investment Promotion Commission (NIPC) in May 2009.”

Meanwhile, in the conditions for listing a company by the Nigerian Security and Exchange Commission, there is free entry and free exit, and as such, telecoms operators can only be encouraged and not compelled to list their shares.

It has therefore, been suggested that compelling operators in any sector, whether telecoms or oil and gas, to go public, will fundamentally alter the Federal Government’s Foreign Direct Investment policy and negate the role of the Nigerian Investment Promotion Commission (NIPC); as well as amount to re-enacting of the Indigenisation Act of 1972.

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