May 15, 2019 / 5:39 AM / 12 days ago

UPDATE 4-MTN Nigeria to list shares in Lagos in $6 bln flotation

* MTN Nigeria listing aimed to help rows with authorities

* Telecoms unit aims to raise cash through equity, debt

* Nigerian investors own 19.4% of MTN Nigeria

* Government has pushed for bigger local stake in unit (Adds details of MTN listing by introduction)

By Chijioke Ohuocha

ABUJA, May 15 (Reuters) - The Nigerian business of South Africa’s MTN Group said it would start trading its existing shares worth about $6 billion in Lagos on Thursday, ahead of its plan for a public offering of new shares to investors in MTN’s biggest market.

The MTN unit has 52.3 million users in Nigeria and its local unit accounts for a third of the Johannesburg-based firm’s core profit, but it has had fraught relations with the Nigerian authorities with run-ins over SIM cards and tax payments.

The move to start trading existing shares on Thursday, known as a listing by introduction, is a step towards resolving those disputes. MTN agreed in 2016 to list as part of a $1.7 billion settlement over the violation of SIM card regulations.

MTN said the listing, approved by the Nigerian Stock Exchange, giving existing shareholders the chance to trade their shares. MTN will not be raising new cash from the listing.

“This is just the beginning, we still intend to pursue a future public offer giving more Nigerians greater access to the MTN opportunity,” MTN Chief Executive Ferdi Moolman said.

No prospectus is required for this type of listing. MTN would typically meet with institutional and other big investors to discuss the business, and would brief stockbrokers on Thursday after the listing, the bourse said.

MTN said on Wednesday the listing price was set at 90 naira ($0.29), based on private over-the-counter share deals by shareholders in the past six months. It said it would list 20.4 billion shares on the Nigerian bourse, valuing the Nigerian unit at 1.84 trillion naira ($6 billion).

MTN Nigeria, in which the South African firm has a 78.8% stake and Nigerian investors hold 19.4%, has faced increased government pressure to lift the level of local ownership.

To patch up ties with Nigeria’s authorities, MTN agreed in December to make a $53 million payment to resolve a row over a multi-billion dollar dividend repatriation that hammered share prices in Johannesburg.

MTN said it was relying on local naira funding to mitigate exchange rate volatility and said the Nigerian unit’s debt had risen 44% to 252 billion naira in the first quarter.

Capital expenditure in the first three months rose to 63 billion naira, with the bulk of it used to upgrade its network, the company said. This was up from 18 billion naira a year ago.

Service revenue grew 13.4% to 282 billion naira in the first period, driven by a rise in voice and data income and the addition of 2.1 million mobile subscribers.

Earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of operating profit, reached 150.4 billion naira in the three months to March 2019, up from 123 billion naira a year earlier, MTN said.

MTN said it was targeting a dividend payout ratio of at least 80% of its net income in the medium term.

$1 = 306.45 naira Reporting by Chijioke Ohuocha Editing by James Emmanuel and Edmund Blair

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