ANALYSIS: How MTN $280 Million IPO Marks A New Dawn

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BY SALIM KALANZI

The response has been overwhelming from the public since MTN Uganda, the largest telecom operator agreed to float 20% shares on the securities exchange.

The MTN initial public offering (IPO) is significant because never in history has a company the size of MTN gone public. MTN launched operations in Uganda in 1998, spearing the major developments in the telecom sector today.

People with knowledge about the IPO prospectus put the company valuation at about $1.4b (sh5.4 trillion), accounting for about 12% of the country’s total budget for the current fiscal year.  

South African MTN Group owns 96% stake in MTN Uganda. The IPO is expected to boost the number of retail investors at the Uganda Securities Exchange from about 40,000 to 200,000 investors.

The telecom was forced to sell its 20% stake as a condition by the government to fulfill its obligation under the new licensing regime.

The MTN IPO is projected to raise about $280 million according to Bloomberg. MTN’s IPO will be the biggest ever since the inception of the Uganda Securities Exchange (USE).

Paul Bwiso, CEO at USE says it has raised $623 million since its inception in 1998.

The most recent IPOs such as power distributor, Umeme raised about $66 million in 2012 and Cipla Quality Chemicals mobilizing over $46m (sh168b) in 2018.

MTN Group Vice President for Southern and East Africa Yolanda Cuba says MTN Uganda plans to invest $281 million (about sh1 trillion) in three years to expand its coverage in the country.

Keith Kalyegira, CEO of the Capital Markets Authority says MTN IPO would increase the value of the exchange’s domestic market capitalisation.

According to the recent USE’s daily trading reports, the domestic market capitalization is sh4.3 trillion.

Information on the IPO value, number of shares and share price will be contained in the Prospectus to be published by MTN in relation to the IPO as soon as it is registered with the Registrar of Companies and subsequently launched.


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