MTN Uganda is set to transform the Ugandan capital market with the biggest initial public offering (IPO) since the Uganda Securities Exchange was launched. It could boost the number of shareholders registered in Uganda from current 40,000 to 200,000.
Parent company MTN is Africa’s biggest mobile phone company by subscribers. The IPO covers 20% of its shareholding in MTN Uganda, consisting of 4,477,808,848 shares with par value UGX1 each and offered for UGX200 per share for a total offer of UGX 895.6 billion ($248.9 million). The shares are to be listed on the Main Investment Market of the Uganda Securities Exchange and the offer will value the company at about $1.25bn.
MTN announced on 5 October that it has received approval from the exchange and from the Capital Markets Authority of Uganda. The prospectus for the offer was released yesterday (11 October) and is available here. The offer closes on 22 November 2021 and the listing is scheduled for 6 December.
Keith Kalyegira, Chief Executive Officer of the CMA, said the listing could increase the market capitalisation of listed Ugandan shares to Ush8 trillion ($2.2bn), effectively doubling the market: “Advisors need to be engaged more and market sensitisation on the benefits and risks involved. We expect a marked improvement of liquidity in the market and the balance sheets of the intermediaries pre- and post-IPO.” This will be the biggest listing on the USE and end a listings drought where the last listing was in 2016. Previously the biggest listing was when Umeme Ltd raised some $66m in 2012. The transaction advisor and lead sponsoring broker is SBG Securities Uganda Ltd, a subsidiary of Stanbic Uganda Holdings Ltd. and Stanbic Bank is the lead receiving bank..
Investors can bid for the shares using their phones in what the company describes as “a digital paperless/ green platform which is the first of its kind in East Africa”. The m-IPO platform is limited to MTN customers using MTN Mobile Money. The USE also has an Easy-Portal or by submitting an application.
The allocation policy will be 1) Ugandan retail investors and eligible employees, 2) Uganda-based professional investors, 3) applicants from East African countries and 4) foreign investors with caps in the case of over-sbuscription.
MTN Uganda said in a press release: “The listing is in line with the group’s strategic priority to create shared value, partly through ensuring broad-based ownership in its operating subsidiaries. It is also in line with the provisions of MTN Uganda’s NTO (national telecom operator) licence, which require its listing by end-June 2022.”
Charles Mbire, Chairperson of the Board of Directors, MTN Uganda said: “It is a reaffirmation of our long-term commitment to expand investment opportunities for Ugandans.”
Regulators drive telco listings across Africa
Government policy in several African countries is forcing the telcoms companies to list on the national stock exchanges, helping the growth and depth of the capital markets. MTN is selling equity stakes and scaling back in order to invest more as it focuses on the African networks. It has already listed MTN telcos in Nigeria, Ghana and Rwanda.
MTN Uganda has 15m subscribers and 46% market share. Its operating licence was renewed for 12 years in February 2020 with listing as part of the conditions. Irene Kaggwa-Sewankambo, the Executive Director of the Uganda Communications Commission, said: “We are delighted to witness the honouring of this commitment by MTN.”
It started operating in Uganda in 1988 and mobile penetration had reached 67% of the population by March 2021. It also operates MTN Mobile Money (MoMo) which was introduced in 2009. It plans to continue investing heavily to expand coverage in Uganda.
MTN Group beneficially owned 96.014% of the shares in the Uganda telco before the offer and is selling off 20% of the total. Mr. Mbire owns 3.986% of the shares and will keep these. Eligible employees can receive a 10% cash subsidy on their applications, up to the equivalent of three months’ gross salary.
Paul Bwire, chief executive of the USE, said recently that the bourse had raised $623m since it was launched in 1998. Out of this, 62% had been raised through IPOs and the rest through follow-on offers and corporate bonds.