The expectation of the management of the Nigerian Stock Exchange (NSE) to hit S1 trillion market capitalisation in five years is partially hinged on the listing of telecommunications companies (telecoms) on the Exchange.
“Our goal is to grow our market capitalisation from $74 billion to $1 trillion in five years. If we can attract the oil and gas sector, if we can attract the telecoms sector and power sector then we should be able to hit those numbers,” the Chief Executive Officer of NSE, Oscar Onyema, declared recently.
In order to achieve the $1 trillion target, the NSE planned to give incentives to telecoms and firms in the oil and gas and power sectors of the economy.
The management of the NSE appears to be getting massive support in the bid to get telecoms listed in the stock market. The Governor of the Central Bank of Nigeria (CBN), Mallam Lamido Sanusi recently called for the listing of all the telecoms operating in Nigeria on the Exchange.
“Why can’t we have a law that compels companies like MTN, Glo, Shell to list? There is certainly no reason. They don’t need to own 100 percent of their companies. And they don’t have to be held closely by a very narrow range of Nigerians. We have a capital market and any company that generates revenue beyond a certain amount in this market should be compelled to list
‘’It is not a problem if they bring in the capital, take their dividends, bring in investment and pay their taxes, but they should list in the capital market,’’ Sanusi said.
According to Sanusi, the companies should not be left to decide when to list in the market, rather, the government must compel them to do so.
“We have a responsibility to make capital live up to responsibility. If we say today that any company generating revenue above X level should list in 18 months, they will list. MTN, give them 18 months to list or get out, they will not get out of Nigeria, where will they go?’’ Sanusi said.
Apart from Sanusi, an operator in the telecoms industry, Dr. Emmanuel Ekuwem, has harped on the imperativeness of the telecoms to list their shares. Ekuwem, who is the immediate past president of the Association of Telecoms Companies of Nigeria (ATCON), has been a pioneer advocate for the listing of telecoms in the Exchange. He said that if for nothing at all, the companies should embrace the idea in the spirit of corporate social responsibility (CSR) and good governance.
According to Ekuwem, what is good for economic growth should be supported by the operators and Nigerians, since the listing would foster development, stability and unity between Nigerians and foreign investors. “’If a country like India could set aside 30 percent of share capital of the country’s telecom operators for public patronage, then it is good business for operators in Nigeria to allow Nigerians invest in their telecom business in the country.,’’ he said.
These sentiments are encouraging enough and it is hoped that very soon the NSE would witness the listing of telecoms. However, considering the performance of the only telecom so far listed on the Exchange, Starcomms Plc, persuading more telecoms to list on the Exchange could be a very herculean task.
Starcomms listed its shares on the NSE in July 2008 at N13.65 per share. The euphoria and enthusiasm that greeted the listing lifted the price by 5 percent to close at N14.35 per share.
The company got listed by introduction after successfully raising N64.35 billion through a private placement. The price gain on the first of its listing made analysts to declare that shares of the company would appreciate further in the days and months ahead.
The success of the listing ceremony also led the doyen stockbroking, Olu Odejimi, to refer to the Starcomms as a “wonder stock.”
Four years after making that grand entry into the stock market, Starcomms Plc is yet to deliver returns to investors who bought the shares at N13.65 during the private placement. It has a tale of woes as the investors helplessly watch their investment plunge by 96.3 percent.
The share price of the telecom has plummeted from N13.65 to N0.50, while the company has neither paid dividends nor issued any bonus. The company has been parading losses since its listing.
Ironically, a year before its listing, the company posted a profit. But four years after listing, Starcomms has amassed losses of N23.455 billion between 2008 and 2010. Prior to 2008, the company had posted a profit after tax of N1.16 billion.
However, the following three years witnessed losses, leaving the investors to rue their haplessness. The losses stood at N8.008 billion in 2008, N7.787 billion in 2009 and N7.66 billion in 2010.
Given the assurance of the company during its listing, no investor envisaged what they are currently going through.
Commenting on the success of the private placement and the fact that the shares appreciated by five percent on listing, founder and Chairman of the Starcomms, Chief Maan Lababidi, said it reflected investors’ belief in the future of the company.
According to him, investors believed in the future of Starcomms and in the management team led by our Chief Executive Officer, Mr. Maher Qubain.
Lababidi stressed that he looked forward to the next exciting phase of development for the country as Starcomms grow in size to serve more Nigerians.
Addressing shareholders last June in Abuja, Lababidi said that the new competition in the industry coupled with the tight credit environment in the banking sector, smaller telecoms found it difficult to survive.
According to him, these operators were originally founded by Nigerians and had provided an opportunity for local players to participate in the fast growing sector.
He said that the consolidation of the telecoms sector was inevitable, and the smaller players would be forced to either consolidate with larger players in order to achieve the economies of scale or face an uncertain future.
“This consolidation will, in my opinion, be good for the sector in the long run, but it is vital that Nigerians remain with a meaningful stake in the telecoms sector or else we face the situation where our industry will be dominated by foreign-owned operators. Starcomms is a proudly Nigerian-owned company with over 12,000 shareholders and is committed to remaining a key player in the telecommunications sector,” he said.
Also speaking on the performance of the company, the immediate past Chief Executive Officer of Starcomms, Maher Qubain, said the company would continue to pursue the strategy of cost reduction that was introduced in 2009.
“We are reducing costs by maintaining head count level as we did in 2008, outsourcing non-core functions and reducing overall operational costs across the regions,” he said.
Qubian added that the company had simplified its organisation by restructuring in commercial and technical aspects to reduce overheads.
“We also completed the sales and co-location lease back of some of our passive tower infrastructure to reduce ongoing tower maintenance operating costs. We are very focused on retaining value by offering attractive bundled services to our customers,” he said.
Ironically, Qubain did not stay to see to how some of the strategies would translate into profitability as he had to quit active position to a passive one as adviser to the board. Although there were several speculations surrounding his exit, Qubain said he wanted to have time for his family and also give someone else the opportunity to inject new ideas into the business.
"I am Starcomms and Starcomms is me. To show a lot of people that I am not asked to quit as speculated, I will not work for any telecommunications company in this country even if it is owned by Dangote," he said.
Meanwhile, Qubain’s successor, Logan Pather, has already promised to take Starcomms to the next level of better performance.
“My agenda for this company is to make it stronger and competitive with the right partnerships. I have to make sure I acquire more subscribers. I must ensure that we are extremely efficient when it comes to cutting costs. We have made significant in-roads in cost reduction. Besides, what will differentiate us from other operators is the top-class customer service delivery,” Pather said.
The CEO denied recent rumours that another operator was about to acquire Starcomms.
According to him, the company is undergoing a remarking process and was making strategic plans on how to expand its business operation in the country both through organic and inorganic means.
“We are not discussing acquisition deal with anybody, but we will not rule out potential partnerships given the challenges in the telecommunication industry,” he said.
Pather, who assured stakeholders of the company of better days ahead, reiterated that his agenda for the company was to acquire more subscribers, become extremely efficient in cost cutting and deliver returns to shareholders.
