Click to edit Master title style LISTING OF NIGERIAN TELECOMMUNICATION COMPANIES ON THE NIGERIAN STOCK EXCHANGE Presented by Haruna Jalo-Waziri ED, Business Development, The Nigerian Stock Exchange at the Session with Telecommunication Companies in Nigeria August 16, 2013
| Click to edit Master title style Outline • Overview of Global Trends in Telecoms 1 • Nigeria’s Comparative Advantage 2 • Industry Challenges and Opportunities 3 • The Nigerian Stock Exchange 4 • Key Initiatives and Achievements 5 • Listing on The Nigerian Stock Exchange 6 • Premium Listing 7 • Key Next Steps 8 8/16/2013 The Nigerian Stock Exchange 2
| Click to edit Master title style Overview of Global Trends in Telecoms New fixed-telephone subscriptions New subscriptions observed to be on a 652 slow decline 2013* 520 655 2012* 531 Developing 662 2011 Developed 542 676 2010 552 - 200 400 600 800 New mobile-cellular subscriptions 5,235 2013* 1,600 4,872 2012* New subscriptions growing faster in 1,538 Developing developing countries, compared to 4,487 2011 Developed 1,475 developed countries 3,901 2010 1,418 - 2,000 4,000 6,000 Source: International Telecommunication Union (ITU) Figures are in millions * Estimates 8/16/2013 The Nigerian Stock Exchange 3
| Click to edit Master title style Overview of Global Trends in Telecoms Cont’d New active mobile-broadband subscriptions New active subscriptions in developing countries, surpassed developed 1,162 countries around 2012 and still on the 2013* 934 increase 768 2012* 788 Developing 472 2011 Developed 683 249 2010 529 - 500 1,000 1,500 New fixed (wired)-broadband subscriptions 357 2013* 340 The trend shows increased new 316 2012* 322 subscriptions in developing countries, Developing surpassing developed countries 282 2011 Developed 306 236 2010 291 - 100 200 300 400 Source: International Telecommunication Union (ITU) Figures are in millions * Estimates 8/16/2013 The Nigerian Stock Exchange 4
| Click to edit Master title style Nigeria’s Comparative Advantage FACT & FIGURES Post 2001 restructuring of the telecoms % Contribution to GDP industry, Nigeria now has one of the most liberalized regimes in Africa Mar'2013 8.53% Significant room for growth: 2012 7.05% 2011 5.67% Teledensity has increased from 2010 4.56% 68.5% in 2011, 71.5% in 2012 to 2009 3.66% 83% in 2013. Slightly below 2008 2.92% developed counterparts (in 2007 2.31% excess of 100%) Broadband penetration is below 2006 1.91% 2005 1.53% 10% 2004 1.27% Over the next 5 years, research 2003 1.06% estimates that over 61 million 2002 0.85% new subscribers will come on 2001 0.62% board 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% As Africa’s most populous nation, with a growing middle class, Source: NCC Nigeria offers massive economic growth potential 8/16/2013 The Nigerian Stock Exchange 5
| Click to edit Master title style Industry Challenges Key Industry Challenges • Erratic power supply • Multiple levies • Vandalisation of equipment • Difficulty in obtaining Right of Way Approval • Insufficient resources to build required infrastructure • Extraneous regulatory issues by government agencies 8/16/2013 The Nigerian Stock Exchange 6
| Click to edit Master title style Opportunities Key Opportunities • Increase in per capita income • Increase in linked ICT products (mobile banking, mobile adverts, social networks) • Increased dependency of Telecom services by critical growth sectors of the economy (Oil & Gas, Agric., Construction, etc.) • About one-third of total population of Nigeria is yet to have access to mobile cellular service • Less than 10% broadband penetration, depicting a huge untapped market (Source: NCC) 8/16/2013 The Nigerian Stock Exchange 7
| Click to edit Master title style About The Nigerian Stock Exchange 2 nd Largest Exchange in Africa by Market Cap Approx. 5 million investors: Foreign (51% of market activity); Local investors (49% of market activity) Over 300 Dealing Member Firms and Issuing Houses Equity and bond products: 254 listed securities (N11.753t in 189 operating companies); 57 bonds (N4.10t in FGN bonds, N471.0b in State bonds, N1.40t in Corp. bonds and N12b in Supranational bond); N829.60m in 1 ETF Founded in 1960 14 electronic trading floors around Nigeria Total Market Cap: N17.742Tn ($110.88bn) Figures as at Aug 15, 2013 8/16/2013 The Nigerian Stock Exchange 8
| Click to edit Master title style NSE Baseline Market Statistics – 12 Months NSE ASI Index Value Value Traded ($) 35,000.00 2,104.08 2,250.00 2,000.00 1,593.97 1,750.00 30,000.00 1,500.00 Millions 1,134.08 1,250.00 998.32 25,000.00 1,000.00 750.00 20,000.00 500.00 250.00 - 15,000.00 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Volume Traded No. of Deals 31,833 35,000 Millions Q2 2013 381,229 30,000 26,508 21,891 25,000 21,137 Q1 2013 383,332 20,000 Q4 2012 265,723 15,000 10,000 Q3 2012 262,692 5,000 - - 100,000 200,000 300,000 400,000 500,000 Q3 2012 Q4 2012 Q1 2013 Q2 2013 8/16/2013 The Nigerian Stock Exchange 9
| Click to edit Master title style Global Exchange Metrics – Indices Strong Global Performance (H1 ’13) • H1 ‘13 performance shows the DJIA performing at 13.78% 70.00% reflecting the impact of the US’s QE stimulus • Although QE is driving performance of US capital markets, the 60.00% 56.72% Nigerian market is being driven more and more by local investors as stated previously 50.00% • As QE is phased out, global investors may seek to cover positions in their respective local markets which may impact Nigeria in 40.00% terms of foreign investors looking to sell down • Performance in the Euro zone as reflected in the FTSE AIM is still 28.80% 30.00% sluggish as a result of the lingering debt crisis 22.61% • Globally, Nigeria remains one of the most attractive markets 20.00% 13.78% 12.63% 12.71% 10.54% 10.00% 5.39% 0.84% 0.00% -10.00% -2.21% -8.18% -6.06% -13.06% -20.00% -19.66% -22.14% -30.00% Ghana Nigeria ASI Nairobi SE DJIA S&P 500 SEMDEX NASDAQ FTSE 100 FTSE/JSE FTSE AIM MASI Hang Seng WIG 20 EGX 100 IBovespa Comp. Composite 8/16/2013 The Nigerian Stock Exchange 10
| Click to edit Master title style The NSE Five Pillars $1 Trillion Market Cap by 2016 5. First-rate investor protection programmes 4. Growth enabling market 3. 21 st structure century technologies 2. Stronger regulatory 1. Targeted environment business development efforts 8/16/2013 The Nigerian Stock Exchange 11
| Click to edit Master title style NSE Scorecard Term 2011 2012 2013 – 2014 - Market Segmentation - Enhancement of Regulatory Programs - ASeM Re-Launch - Company Share Buy-Back - Financial Literacy Program - X-Issuer Portal - Introduction of ETFs - IFRS Compliance - CSR Program - Investor Clinics - Market Data Services On-going - New Web Site - Advocacy - Product Innovation (e.g. ETFs, NDRs) Within NSE Control - Revised Listing Rules - Market Making - Coop with Other Exchanges & Global - Market Making (approved) - Securities Lending Orgs - Securities Lending (approved) - Short Selling - Policy Advocacy NSE Key Initiatives - Short Selling (approved) - Demutualization - Develop Product Liquidity and Depth - Attract and Retain More Listings - Derivatives Feasibility Study - Transaction Cost Analysis - Enhanced Rulebook - Whistle Blowing Program - Delivery of X-Gen - Market Optimization - Operation of Investor Protection Fund - Automation of Transaction Lifecycle - AMCON Debt Resolution - Review PFA Investment Guidelines - Policy on Large Cap Firms Outside NSE - Advocacy - Tax Breaks on Transaction Fees - Access to SWF Funds Control - Exit Strategy for Privatized Entities - Reduce Focus on Dividends - Broker Margin Debt Resolution - Capacity of Local Institutional Investors - Broker Access to Funding (on-going) 8/16/2013 The Nigerian Stock Exchange 12
| Click to edit Master title style Success Recorded So Far in Advocacy 1. VAT and Stamp Duty elimination from secondary market transaction cost (Awaiting gazzetting) 2. Margin Debt Relief by AMCON 8/16/2013 The Nigerian Stock Exchange 13
| Click to edit Master title style On-going NSE Advocacy Efforts Review of PENCOM Sovereign Wealth Asset Allocation Fund Policy for PFAs Creates buffer for market Biggest pool of long-term volatility created by foreign investable capital (N3.4t) portfolio investors Guidelines very limiting in the Solution to missing major local types of assets in which PFAs institutional investor in our can invest market Our Recommendation Our Recommendation Permit securities lending, participation in IPOs, exposure Increase the exposure of the to ETFs, and other asset classes Future Generations Fund * Pending revision of PENCOM (Currently at 32.5% of SWF) in guidelines the Nigerian capital market 8/16/2013 The Nigerian Stock Exchange 14
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