By Akintola Omigbodun

There are a number of companies with significant total capital employed but which companies are not listed on the Nigerian Stock Exchange, NSE. Besides their registration under the Companies and Allied Matters Act, these companies operate in areas such as banking, telecommunications, crude oil exploration and the electric power sector in which areas the companies require the grant of licences from government agencies before the companies can operate. Some of these companies are offering very important services to the public but there is very little information available to the public relating their charges to the efficiency of the services they offer.

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Starting with the telecommunications companies which provide GSM services, there is an apparent lowering of prices as the companies move from one promotion to another. MTN Communications Nigeria is a part of the MTN Group which has its headquarters in South Africa and operates in several countries which include Ghana and Iran. The MTN Group publishes its accounts as a South African company and about 36% of its total revenue is from its Nigerian operations. There have been suggestions that these telecommunications companies should be listed on the NSE. However, what would be in best interest of the Nigerian investor, to invest in the MTN Group or in MTN Communications Nigeria?

The other telecommunications companies have not displayed their financial statements and our primary concerns are the quality of services and the prices paid for the services of these companies. There are a number of elements to the licences granted for a business activity. In the first place, a licence guarantees the market for the company granted the licence. In the second place, the licence holder is expected to provide efficient services at reasonable prices.

The business activity that we are familiar with and for which licences are granted is the banking industry. Banks are required to display their audited statements of financial position and comprehensive income at their branches. Banks receive deposits from the public and the statements are expected to assure the public that their deposits are safe. However, we have witnessed bank failures with shareholders losing all their investments and depositors struggling over time to recover their deposits through the Nigerian Deposit Insurance Corporation.

It would therefore be useful if the telecommunications companies and others who operate with licences are made to display/publish their financial statements. Recently, there have been complaints about the amounts charged for digital television services. I hope the complainants have been able to gather information with which to back up their complaints before the Consumer Protection Council.

Significantly, some of the banks have invested in the shares of the telecommunications companies and there is little indication that the banks have received dividends payments for their investments. Also, the banks in consortium have granted huge loans to the telecommunications companies.

The banks are quoted companies whilst the telecommunications companies are unquoted and there are concerns about what should be the relationship between a quoted company whose financial statements are public and an unquoted company whose financial performance is not public.

Any company can run into difficulties over one inappropriate investment decision and the banks should consider carefully their investments in the telecommunications companies. If the telecommunications companies are sufficiently prosperous that they do not need the cheaper funds from the capital market, the companies should operate as they are.