listing of nigerian telecommunication companies on the nigerian ...

Click to edit Master title styleLISTING OF NIGERIAN TELECOMMUNICATIONCOMPANIES ON THE NIGERIAN STOCKEXCHANGEPresented byHaruna Jalo-WaziriED, Business Development, The Nigerian Stock Exchangeat theSession with Telecommunication Companies in NigeriaAugust 16, 2013

Click to edit Master title style| Outline12345678• Overview <strong>of</strong> Global Trends in Telecoms• Nigeria’s Comparative Advantage• Industry Challenges and Opportunities• The Nigerian Stock Exchange• Key Initiatives and Achievements• Listing on The Nigerian Stock Exchange• Premium Listing• Key Next Steps8/16/2013 The Nigerian Stock Exchange2

| Click Overview to edit <strong>of</strong> Master Global Trends title style in Telecoms2013*New fixed-telephone subscriptions520652New subscriptions observed to be on aslow decline2012*2011531542655662DevelopingDeveloped2010552676- 200 400 600 800New mobile-cellular subscriptions2013*1,6005,235New subscriptions growing faster indeveloping countries, compared todeveloped countries2012*20111,5381,4754,8724,487DevelopingDeveloped20101,4183,901- 2,000 4,000 6,000Source: International Telecommunication Union (ITU)Figures are in millions* Estimates8/16/2013 The Nigerian Stock Exchange3

| Click Overview to edit <strong>of</strong> Master Global Trends title style in Telecoms Cont’d2013*2012*2011New active mobile-broadbandsubscriptions4726837687889341,162DevelopingDevelopedNew active subscriptions in developingcountries, surpassed developedcountries around 2012 and still on theincrease2010249529- 500 1,000 1,500New fixed (wired)-broadbandsubscriptionsThe trend shows increased newsubscriptions in developing countries,surpassing developed countries2013*2012*2011357340316322282306DevelopingDeveloped2010236291- 100 200 300 400Source: International Telecommunication Union (ITU)Figures are in millions* Estimates8/16/2013 The Nigerian Stock Exchange4

| Click Nigeria’s to edit Comparative Master title Advantage style% Contribution to GDPMar'20138.53%20127.05%20115.67%20104.56%20093.66%20082.92%20072.31%20061.91%20051.53%20041.27%20031.06%20020.85%2001 0.62%0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00%Source: NCCFACT & FIGURES• Post 2001 restructuring <strong>of</strong> the telecomsindustry, Nigeria now has one <strong>of</strong> themost liberalized regimes in Africa• Significant room for growth:• Teledensity has increased from68.5% in 2011, 71.5% in 2012 to83% in 2013. Slightly belowdeveloped counterparts (inexcess <strong>of</strong> 100%)• Broadband penetration is below10%• Over the next 5 years, researchestimates that over 61 millionnew subscribers will come onboard• As Africa’s most populous nation,with a growing middle class,Nigeria <strong>of</strong>fers massive economicgrowth potential8/16/2013 The Nigerian Stock Exchange5

| Click Industry to edit Challenges Master title styleKey Industry Challenges• Erratic power supply• Multiple levies• Vandalisation <strong>of</strong> equipment• Difficulty in obtaining Right <strong>of</strong> Way Approval• Insufficient resources to build requiredinfrastructure• Extraneous regulatory issues by governmentagencies8/16/2013 The Nigerian Stock Exchange6

| Click Opportunities to edit Master title styleKey Opportunities• Increase in per capita income• Increase in linked ICT products (mobile banking, mobile adverts,social networks)• Increased dependency <strong>of</strong> Telecom services by critical growthsectors <strong>of</strong> the economy (Oil & Gas, Agric., Construction, etc.)• About one-third <strong>of</strong> total population <strong>of</strong> Nigeria is yet to have accessto mobile cellular service• Less than 10% broadband penetration, depicting a huge untappedmarket (Source: NCC)8/16/2013 The Nigerian Stock Exchange7

| Click About to The edit Nigerian Master Stock title style Exchange2 nd Largest Exchange in Africa by Market CapApprox. 5 million investors: Foreign (51% <strong>of</strong>market activity); Local investors (49% <strong>of</strong>market activity)Over 300 Dealing Member Firms and IssuingHousesEquity and bond products: 254 listedsecurities (N11.753t in 189 operating<strong>companies</strong>); 57 bonds (N4.10t in FGNbonds, N471.0b in State bonds, N1.40t inCorp. bonds and N12b in Supranationalbond); N829.60m in 1 ETFFounded in 196014 electronic trading floors aroundNigeriaTotal Market Cap: N17.742Tn ($110.88bn)8/16/2013 The Nigerian Stock ExchangeFigures as at Aug 15, 20138

MillionsMillions| Click NSE Baseline to edit Master Market title Statistics style – 12 MonthsNSE ASI Index Value35,000.0030,000.0025,000.0020,000.0015,000.00Q3 2012 Q4 2012 Q1 2013 Q2 2013Volume Traded35,00031,83330,00026,50825,000 21,891 21,13720,00015,00010,0005,000-Q3 2012 Q4 2012 Q1 2013 Q2 2013Value Traded ($)No. <strong>of</strong> DealsQ2 2013Q1 2013Q4 2012Q3 20122,250.002,000.001,750.001,500.001,250.001,000.00750.00500.00250.00-998.321,134.081,593.97265,723262,6922,104.08Q3 2012 Q4 2012 Q1 2013 Q2 2013381,229383,332- 100,000 200,000 300,000 400,000 500,0008/16/2013 The Nigerian Stock Exchange9

| Click Global to Exchange edit Master Metrics title style – IndicesStrong Global Performance (H1 ’13)70.00%60.00%50.00%40.00%30.00%20.00%10.00%0.00%56.72%28.80%22.61%13.78% 12.63%10.54%12.71%• H1 ‘13 performance shows the DJIA performing at 13.78%reflecting the impact <strong>of</strong> the US’s QE stimulus• Although QE is driving performance <strong>of</strong> US capital markets, theNigerian market is being driven more and more by local investorsas stated previously• As QE is phased out, global investors may seek to cover positionsin their respective local markets which may impact Nigeria interms <strong>of</strong> foreign investors looking to sell down• Performance in the Euro zone as reflected in the FTSE AIM is stillsluggish as a result <strong>of</strong> the lingering debt crisis• Globally, Nigeria remains one <strong>of</strong> the most attractive markets5.39%0.84%-10.00%-20.00%-30.00%GhanaComp.Nigeria ASI Nairobi SE DJIA S&P 500 SEMDEX NASDAQComposite-2.21%-6.06%-8.18%-13.06%-19.66%-22.14%FTSE 100 FTSE/JSE FTSE AIM MASI Hang Seng WIG 20 EGX 100 IBovespa8/16/2013 The Nigerian Stock Exchange10

| Click The NSE to edit Five Master Pillars title style5. First-rateinvestorprotectionprogrammes$1 Trillion Market Cap by 20161. Targetedbusinessdevelopmentefforts2. Strongerregulatoryenvironment3. 21 stcenturytechnologies4. Growthenablingmarketstructure8/16/2013 The Nigerian Stock Exchange11

NSE Key InitiativesOutside NSEControlWithin NSE Control| Click NSE to Scorecard edit Master title styleTerm2011 2012 2013 – 2014- Market Segmentation - Company Share Buy-Back - Introduction <strong>of</strong> ETFs - Investor Clinics - New Web Site - Revised Listing Rules - Market Making (approved) - Securities Lending (approved) - Short Selling (approved) - AMCON Debt Resolution - Advocacy - Enhancement <strong>of</strong> Regulatory Programs - Financial Literacy Program - IFRS Compliance - Market Data Services - Advocacy - Market Making - Securities Lending - Short Selling - Develop Product Liquidity and Depth- Attract and Retain More Listings- Review PFA Investment Guidelines - Tax Breaks on Transaction Fees - Exit Strategy for Privatized Entities - Broker Margin Debt Resolution - Broker Access to Funding- ASeM Re-Launch - X-Issuer Portal - CSR Program On-going- Product Innovation (e.g. ETFs, NDRs) - Coop with Other Exchanges & GlobalOrgs - Policy Advocacy - Demutualization - Derivatives Feasibility Study- Transaction Cost Analysis- Enhanced Rulebook- Whistle Blowing Program- Delivery <strong>of</strong> X-Gen- Market Optimization- Operation <strong>of</strong> Investor Protection Fund- Automation <strong>of</strong> Transaction Lifecycle- Policy on Large Cap Firms- Access to SWF Funds- Reduce Focus on Dividends- Capacity <strong>of</strong> Local Institutional Investors (on-going)8/16/2013 The Nigerian Stock Exchange12

| Click Success to edit Recorded Master So title Far style in Advocacy1. VAT and Stamp Duty elimination fromsecondary market transaction cost(Awaiting gazzetting)2. Margin Debt Relief by AMCON8/16/2013 The Nigerian Stock Exchange13

| Click On-going to edit NSE Master Advocacy title Efforts styleReview <strong>of</strong> PENCOMAsset AllocationPolicy for PFAsSovereign WealthFundBiggest pool <strong>of</strong> long-terminvestable capital (N3.4t)Guidelines very limiting in thetypes <strong>of</strong> assets in which PFAscan investCreates buffer for marketvolatility created by foreignportfolio investorsSolution to missing major localinstitutional investor in ourmarketOur RecommendationPermit securities lending,participation in IPOs, exposureto ETFs, and other asset classes* Pending revision <strong>of</strong> PENCOMguidelinesOur RecommendationIncrease the exposure <strong>of</strong> theFuture Generations Fund(Currently at 32.5% <strong>of</strong> SWF) inthe Nigerian capital market8/16/2013 The Nigerian Stock Exchange14

| Click On-going to edit NSE Master Advocacy title Efforts style Cont’dReview <strong>of</strong> ExitStrategy for PrivatizedGovernment EntitiesPPP Underutilization<strong>of</strong> the Capital MarketUse capital market to addresstransparency, corporategovernance, risk and publicperception issues, while providingpublic opportunity to participateUSD 56.5b investment required tomeet Vision 20:2020 targets in keysectorsUrgent need to attract diversesources <strong>of</strong> capital, e.g., <strong>companies</strong>and funds that have raised capitalfrom the marketOur RecommendationSimultaneous <strong>listing</strong> <strong>of</strong> <strong>companies</strong>earmarked for privatization at thetime they are soldOur RecommendationICRC should make provisions forlisted <strong>companies</strong> and funds in theICRC Manual8/16/2013 The Nigerian Stock Exchange15

| Click On-going to edit NSE Master Advocacy title Efforts style Cont’dLocal Content Policy inNigeriaMethod Review <strong>of</strong>Award <strong>of</strong> GovernmentContracts by BPPThe Policy provides certainprivileges to complying <strong>of</strong>f-shore<strong>companies</strong> in NigeriaCurrent requirement is forminimum 51% stake by localinvestors/shareholdersThe Bureau <strong>of</strong> PublicProcurements currently monitorsand oversees public procurementsin across NigeriaOur RecommendationDefinition by SEC to make listed<strong>companies</strong> Local ContentCompliant, without having up to51% stake by local investors/shareholders to be made <strong>of</strong>ficialOur RecommendationListed <strong>companies</strong> to be givenpreference in the award <strong>of</strong>contractsRestrict certain contracts to listed<strong>companies</strong>8/16/2013 The Nigerian Stock Exchange16

| Click Premium to edit Listing Master title styleThe Nigerian StockExchange iscurrently developingguidelines for<strong>companies</strong> to beadmitted to itsproposed PremiumBoardA key tool indeterminingqualifying <strong>companies</strong>will be a CorporateGovernance Index(CGI), which will rate<strong>companies</strong> listed onThe Exchange interms <strong>of</strong> CorporateGovernance Practices8/16/2013 The Nigerian Stock Exchange17

| Click Specific to edit Benefits Master <strong>of</strong> Listing title style to TelcosBroad ownership base,increased public interestand participationEnhanced vigilance andprotection <strong>of</strong> Telco assetsagainst vandalisationStrong support byparticipating stakeholdersto address challengesfacing the industryWill be beneficiaries <strong>of</strong>NSE’s advocacy efforts forlarge cap <strong>companies</strong> (e.g.tax incentives)8/16/2013 The Nigerian Stock Exchange18

| Click Further to edit Benefits Master <strong>of</strong> Listing title styleAccess to LongTerm Capital forGrowth &ExpansionTransparencyand Credibilityin OperationTelco. PlcPerpetuity <strong>of</strong>OperationsCode <strong>of</strong>CorporateGovernance asa competitivetoolRisk SharingamongstShareholdersSharedOwnershipwithin country<strong>of</strong> operationPlatform forattractingadditionalinvestment andinvestorsValue Creation& PriceDiscovery8/16/2013 The Nigerian Stock Exchange19

| Click Major to Concerns edit Master About title Listing styleValuationThe NSE has introducedefficient systems whichprovide the platform for truevaluation <strong>of</strong> listed<strong>companies</strong>, from allavailable public informationShareholder AssociationThe NSE, in conjunction withthe SEC is writing rules aroundconduct <strong>of</strong> AGMs, which wouldguide activities and participationby all stakeholders, includingShareholder Associations atAGMsMarket Depth & LiquidityThere is increasing interest andparticipation by both local andforeign institutional and retailinvestors in the Nigerian capitalmarket with average dailytrades currently at $35m asagainst $17m in 2012Cost <strong>of</strong> ListingThe SEC has capped totalcost at 4.3% (NSE fees 0.3%<strong>of</strong> market cap for IPOs and0.3% <strong>of</strong> nominal value <strong>of</strong><strong>listing</strong> by introduction) plusnegotiable pr<strong>of</strong>essional feesAdditional DisclosuresPublic interest <strong>companies</strong>should be transparent so as toimprove public perception andconfidenceArbitrary TaxThe Joint Tax Board, inpartnership with TheExchange thrives to ensure noarbitrary tax payments aremade by listed <strong>companies</strong>, asa result <strong>of</strong> being listed8/16/2013 The Nigerian Stock Exchange20

| Click Selected to edit Listed Master Telcos title styleChina Mobile Ltd• Listed on Hong Kong StockExchange• Present in 3 countries• 1-Yr Return: -0.94%• PE (ttm): 10.06x• Mkt Cap (US$’b): 212.33Vodafone Group PlcVerizon Communications Inc• Listed on New York StockExchange• Present in 1 country• 1-Yr Return: +15.76%• PE (ttm): 21.60x• Mkt Cap (US$’b): 144.92• Listed on London StockExchange• Present in 22 countries• 1-Yr Return: +11.52%• PE (ttm): 220.50x• Mkt Cap (US$’b): 140.42Vodacom Group Plc• Listed on Johannesburg StockExchange• Present in 1 country• 1-Yr Return: +34.19%• PE (ttm): 13.01xSource: Bloomberg• Mkt Cap (US$’b): 17.10• Part <strong>of</strong> Vodafone Group8/16/2013 The Nigerian Stock Exchange21

| Click Conclusion to edit Master title style• There is growing support for compulsory <strong>listing</strong> <strong>of</strong> telcos at thenational assembly• Increasing calls to link license renewal to <strong>listing</strong>• Increasing negative public perception <strong>of</strong> oligopoly in industry• We are not averse to these positions but will continue toengage all parties in the hope that public interest <strong>companies</strong>including telcos would be listed or at least on the part to <strong>listing</strong>within the next 12 months• The current flexibility and gains from this process <strong>of</strong>engagement and advocacy at the highest levels <strong>of</strong>government could be lost if not acted upon8/16/2013 The Nigerian Stock Exchange22

Click to edit Master title styleThank YouStock Exchange House2 - 4 Customs StreetP.O. Box 2457, MarinaLagos Island, Lagos, Nigeria<strong>listing</strong>sales@nse.com.ngwww.nse.com.ng