Tension funds in Nigeria are one of the most sought after investors due to their size and quantum of investible funds. Investors therefore use their indices for determining where they put their money. However, the Pension Reform Act (PRA) 2014 provides conditions for Pension funds to invest in. The conditions stipulate that the company must have dividends at least one out of five years and must be profitable three out of five years.
According to experts, MTN listing on the Nigerian Stock Exchange will increase the market capitalisation by about 22 per cent.
MTN Group easily meets these criteria in South Africa, even though it is yet to be listed in Nigeria. The benefits for pension fund assets are also significant as PFAs do not have a big, proven and reliable company that they can invest in.
Besides, the Federal Government also gains immensely by attracting MTN to invest in Nigeria via taxes. Nigeria currently does not tax capital gains made from the sale of shares, however it does places a 10 per cent withholding tax on dividends paid by companies. It also charges a five per cent VAT on commission and fees paid to stockbrokers when shares are bought and sold. A company the size of MTN will contribute immensely to the government’s tax revenue if it eventually lists.
One of the major reasons why people invest in shares is for capital gains. Capital gains are recorded whenever you profit from the sale of your property or investment. MTN being a highly profitable company is likely to record capital gains more often than not.
One of the rewards for being a shareholder of a company is also receiving dividends. Dividends can be paid via cash or via a script issue of shares for free. MTN has paid dividends every year since 2004 according to records from its website.
A consistently paying dividend company means the company is profit-making and shares part of that profit to its shareholders. Long term fundamental investors prefer dividend paying companies because it is a measure of how tenacious they are at making profits while growing the business. MTN’s track record of paying dividends will be of immense benefit to Nigerians who love dividend paying companies.
The Securities and Exchange Commission and NSE have been consistent in its advocacy to the Federal Government to help encourage multinational companies operating in the country to list on the Exchange, to give Nigerians the opportunity to benefit from their investments.
It would be recalled that during a recent visit to the NSE, the Speaker, House of Representatives, Rt Hon. Yakubu Dogara, assured that extra-ordinary measures would be taken by the parliament, and indeed all political institutions in the country, to compel large multinational companies with interests in telecommunications, oil and gas to get listed on the NSE.
Dogara who observed that foreign telecommunications companies operating in the country since 2001 have not only been declaring huge profits, but are also listed in their countries’ stock exchanges, but they have continued to rebuff calls for them to list on the NSE, even though they make most of their profits here, said it is heartening to note that MTN is eyeing the stock market.
“MTN Nigeria’s parent company is listed on the Johannesburg Stock Exchange (JSE) while Airtel and Etisalat are listed on the Indian Stock Exchange and Abu Dhabi Stock Exchange respectively. Etisalat is also planning to list on the Egyptian Stock Exchange,” he stressed.