MTN more valuable than all Nigerian Banks?

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MTN Nigeria is now worth N5 trillion making it more valuable than all banks, insurance companies, and the entire financial services companies, NIYI JACOBS writes

MTN Nigeria is now worth N5 trillion making it more valuable than all banks, insurance companies, and the entire financial services companies, NIYI JACOBS writes

Nigeria’s telecommunication giant, MTN Nigeria is now worth N5 trillion making it more valuable than all banks, insurance companies, and the entire financial services companies listed on the Nigerian Stock Exchange combined.
This is according to market valuation data as of May 20th, 2022, tracked and compiled by Nairametrics from the Nigerian Exchange.
As of Friday, MTN Nigeria closed with a total market capitalization of N5.068 trillion making it the third most capitalized stock on the Nigerian Exchange. MTN Nigeria now joining Airtel and Dangote Cement, all members of the SWOOT to be worth more than the financial services sector.
MTN was briefly the most capitalized stock two weeks ago when the share price was trading at N264 per share valuing it at N5.3 trillion. However, Airtel and Dangote Cement prices have since risen while MTN shed some of its gains.
MTN Nigeria belongs to a category of companies termed SWOOTs by Nairametrics which means Stocks Worth Over One Trillion Naira. Other members of the group include Airtel Africa (N5.5 trillion) Dangote Cement (N5.1 trillion), BUA Cement (N2.5 trillion), Nestle (N1.1 trillion), and BUA Food (N1 trillion).


MTN now more Valuable than all Financial Services Companies


Shares of MTN have been on the rise since the beginning of the year starting from about N197 to as high as N270 last week.
The share spike which is also largely driven by MTN’s blistering 2021 FY results and 2022 first-quarter results took it past N5 trillion during the week joining Airtel and Dangote Cement as the only three stocks worth over N5 trillion in Nigeria.
The entire Nigerian Financial Services sector which includes banks, insurance companies, and other financial institutions is valued at a combined N4 trillion.
With an over N1 trillion gap between MTN’s valuation and that of Financial services companies, the telecom giant is now firmly more valued than all of them and will have to experience a 20% dip in share price to fall below.
MTN’s share price has risen 51.38% in the last year.
While Airtel, valued at over N5.5 trillion is also more valuable than all the financial services firms, MTN is more significant as the company’s financials represent income generated from Nigeria alone, excluding other African countries.
Airtel’s income includes that of other sub-Saharan African countries even though the income of Nigeria is dominant with about 40% of revenues.


Why are telcos more valuable

A combination of factors explains why MTN and even Airtel are more valuable than the Nigerian financial services sector including banks.
While banks have been declaring impressive profits telcos have gone further by not just declaring profits but achieving double-digit growth projections for other sectors of their market, especially data.
With over 199 million active mobile subscribers, telcos have the customer base and demand that will continue to drive up revenues and profits in years to come.
Apart from data, Telcos also have the capacity and funding to veer into other sectors of the economy starting with banking. The recent MOMO license obtained by MTN opens up a new source of revenue for the organization.
Asides, from their growth prospects, telcos also have better control of their margins and returns. Unlike the financial services sector, Telcos deliver over 100% return on average equity of about 20%. MTN reported a return on average equity of 134% in 2021.
Apart from fundamentals, Nigerian banks also have billions in shares trading with much higher liquidity when compared to telcos.
This is due to the high proportion of single owners of the shares of the banks compared to telcos. For example, Zenith has about 643, 965 shareholders compared to MTN’s 10,931 as of the end of 2021. Also, whilst 2 shareholders own 15% of Zenith Bank, one shareholder owns 76% of MTN.


The shift in the size of Nigeria’s economy


We are also not surprised that MTN has now eclipsed the entire financial service sector in market valuation.
According to Nigeria’s GDP data, the telecommunications sector had a nominal GDP of N14.1 trillion as of December 2021 compared to N5.3 trillion for the entire financial services sector.
10 years ago (2021), Telecommunication Sector has a nominal GDP of N5.3 trillion while banks had a GDP nominal size of N1.49 trillion.
Meanwhile Airtel Africa Plc’s share price appreciated by 5.00% to stand at N1,470 per share at the end of the trading week, with a market capitalization of N5.52 trillion.
Airtel Africa Plc ended the week as the most capitalized company on the exchange once again, vying for the position with Dangote Cement Plc.
Airtel Africa Plc, telecom giant, has released its 2021 9-month Unaudited Financial Statement revealing a 22.5% growth in revenue from $2.85 billion in 2020 to $3.49 billion in the current period.
Net profit for the nine-month period appreciated significantly by 97.3% from $261 million in 2020 to $514 million.
Nestle Nigeria Plc – N1,401.40
Nestle Nigeria Plc’s share price declined by 2.68% to close the week at N1,401.40 per share, amidst sell-offs and buy-interests during the trading week. The Fast-Moving Consumer Goods company currently has a market capitalization of N1.11 trillion. Nestle Nigeria Plc is one of the two companies under the NGX Consumer goods Index to be worth over a trillion.
The Q1 2022 financial result revealed a profit of N17.98 billion, representing a 45% increase from the prior-year period as revenue grew by 26%. Earnings per share for the period was at N22.68.
Other companies under the SWOOT classification remained unchanged in share prices and their performances are summarized below:
BUA Cement Plc – N74.25
BUA Cement Plc’s share price remained unchanged to close at N74.25, with the market capitalization standing at N2.51 trillion at the end of the trading week.
The company’s Q1 2022 financial report revealed revenue of N96.99 billion, reflecting a growth of 58% from N61.19 billion in 2021. Similarly, net income increased by N11 billion, reflecting a 48% increase from N22.37 billion recorded in the corresponding period of 2021, to N33.144 billion in the current period.

BUA Foods Plc – N57.90

BUA Foods Plc’s share price remained unchanged as well to close at N57.90, with the market capitalization standing at N1.04 trillion in market value at the end of the trading week.
BUA Foods was newly listed company on the exchange in January 2022, however, the Q1 2022 financial result revealed a 19% growth in Profit after Tax from N22.84 billion recorded in the corresponding period of 2021 to N22.84 billion in the period reported.
The FMCG company, reported revenue of N90.07 billion, reflecting a growth of 28.30% from N70.20 billion in the corresponding period of 2021.

Dangote Cement Plc – N300.00

Dangote Cement Plc’s share price stood unchanged to close at N300.00 at the end of the trading week as the company’s market capitalization stood at N5.11 trillion. The company, which is a competitor of Bua Cement Plc and Wapco Plc, has a total Market capitalization of N5.11 trillion.
Dangote Cement Plc is the third most-valued company quoted on the exchange and makes up roughly 26% of the total market capitalization of all stocks worth over one trillion.
The Q1 2022 financial result revealed a profit of N105.85 billion during the period, representing an 18% increase Y-o-Y. Meanwhile, Revenue for the period stood at N413.18 billion, a 24.20% increase from the corresponding period of 2021.