MTN International, a Johannesburg-based carrier, is offering bonus shares to Kenyan Investors keen to buy into the sale of 20% stake of MTN Uganda, in an Initial Public Offer (IPO) worth $250 Million – considered the second largest in East Africa after that of Kenya’s Safaricom in 2008.
“We are inviting investors from Kenya and East Africa so as to widen our shareholding, have more appeal, be stronger and give back to the community where we operate,” MTN Uganda CEO Wim Vanhelleputte told a virtual press conference on Thursday after the telco received a no objection by Kenya’s regulator to market the IPO in Kenya.
Apart from listing at the Uganda Stock Exchange (USE), MTN Uganda is required to widen its shareholder base and widen its network.
“We have to fulfil these licensing conditions by June 2022 and give back to the community where we operate by having local ownership,” said Vanhelleputte.
According to Anne Juuko- Stanbic Bank Uganda, the MTN Uganda IPO will be offering 4.4 Billion shares worth KSh 27.9 Billion to Kenyans, at the rate of KSh 6.25 per share.
The IPO, which began on 11th October 2021 runs until 22nd November 2021, allotment of shares on 3rd December with listing at the Uganda Securities Exchange(USE) to take place on December 6th 2021.
Kenyan investors will be offered a bonus of 5 shares for every 100 shares bought while Ugandans will be offered 10 shares for every 100 shares purchased.
“Stanbic Bank Uganda is the receiving bank and will therefore be in charge of the entire process including disbursement of IPO refunds,” said Ms Juuko.
According to its prospectus, MTN Uganda has been on a growth trajectory with its top-line growing by 10% over the past 5 years despite effects of the COVID-19 pandemic and 20 per cent growth year-on-year bottom line growth.
” Uganda has a large youthful population and a robust economy with a GDP growth of between 5% and 6%. The era of oil production which will begin in the next two years, will lift Uganda’s economy further, fundamentals that make the country attractive,” said Vanhelleputte.
He said there is headroom for growth given that only one in three adults have a smartphone with those with access to mobile phones standing at 9.5 Million subscribers.
“We are just getting started on mobile cash payments in Uganda and expect to grow exponentially and increase the number of merchants on this platform,” said Vanhelleputte.
MTN International will retain 76% ownership of its Ugandan subsidiary after offloading 20% of its 96% stake in the business.
The MTN Uganda IPO, considered the largest in Uganda, is expected to double the size of the Uganda Securities Exchange (USE) when the listing is complete.
Stanbic Uganda told Kenyan Wallstreet that all systems are in place to ensure there is no clogging in the refund process which is set to commence a fortnight after the December 3rd 2021 allotment.
MTN International, Africa’s largest wireless carrier plans to sell 20% of the unit raising about $250 million, proceeds that will go to expand the MTN Uganda network.
“MTN Uganda has a strong balance sheet and will use part of the IPO proceeds to expand its network at a cost of 1 trillion Ug Shillings while the rest will go to MTN International,” said Vanhelleputte.
We are initiating coverage on MTN Uganda with an OVER- WEIGHT recommendation and a target price of UGX 218.78 representing a 9.4% upside from the current offer price of UGX 200.” noted Dyer and Blair, one of the investment banks that has been cleared by Kenya’s Capital Markets Authority.
According to Dyer, MTN Uganda has consistently upheld its market leadership position in mobile subscriptions in Uganda, growing its market share from 47% in 2016 to 50% in 2020. As at 30th June 2021, MTNU’s market share stood at 59.1%.
“In FY21, we expect MTNU’s market share to reach 60% (from 50.0% in FY20), largely benefitting from the exits of two competitors (Smart & Africell). By FY23, we estimate MTNU’s market share at 62.0%, reaffirming its market leadership position.” reads the note.