MTN Nigeria became the most valuable company in the Nigerian Stock Exchange on Monday. Dangote Group made way few days ago for the telecom giant. I expect Airtel Africa which quickly cracked the top four, upon listing, to settle as #2 in coming months. [Currently, Dangote has recovered its position as #1].
It may be a new kid on the block, but MTN Group Ltd.’s Nigerian unit has become the most valuable company on the Lagos stock exchange. Three months after listing, MTN Nigeria Communications Plc had a market capitalization of 2.82 trillion naira ($7.82 billion) as of Monday’s close. The mobile phone company has overtaken Dangote Cement Plc, owned by Africa’s richest man, Aliko Dangote.
For MTN Nigeria, I see an era of dominance. Our largest bank, GTBank, by market cap with value market of N795 billion (about $2.2 billion using black market exchange rate), will experience more pressure as MTN Nigeria turns into a quasi financial institution. GTBank few months ago had a market cap of N1.3 trillion but has been bleeding value due to enormous pressure that MTN will take over the financial services sector.
This is a big deal in Nigeria’s financial sector – MTN Nigeria receives Central Bank of Nigeria’s “full super agent” licence, Reuters reports: “Through the network established by YDFS, MTN is in a position to broaden the availability of financial services for the under-served across the country. This marks a very important first step in leveraging our infrastructure to scale our Fintech initiatives,” said MTN Nigeria CEO. Besides, MTN Nigeria has applied for Payment Service Bank Licence as it works to close the loop.
Yes, MTN will become Nigeria’s largest financial institution with excess of 65 million customers while Access Bank, the largest bank by asset, cannot command close to unique 15 million customers. More so, First Bank is still well below 20 million customers. So, MTN has no major competitor in this space.
When you model all these elements, you can see why MTN Nigeria is now the king of Nigeria’s broad street! For the banks, you are the small boys now – MTN has a bigger “car” with 65 million passengers; none of you is close to 20 million. I predict erosion in bank profits starting Q1 2020 as MTN reshapes our financial sector.
Update: Dangote Group has regained the position as at today. MTN N has a market cap of N2.809T while Dangote Group has a little more.