MTN rides the tech IPO wave with share sale in Uganda

By Luke Mulunda

Mobile services operator MTN Uganda is offering 4.4 billion shares for sale in a US$250m initial public offering (IPO) that will see it cede 20% stake in the company. The IPO is priced at $0.06 (200 Ugandan shillings) per share, with the minimum investment pegged at 500 shares.

The MTN listing is part fulfilment of a condition set by the Ugandan government for the company to float at least 20% stake to get a license renewal in 2020 for another 12 years after paying US$100m.

MTN Uganda IPO is the country’s biggest and major boost the Uganda Securities Exchange (USE), which has only 17 listed companies compared, for example, to Kenya which has over 50 companies. As the first telecommunications company to list on Uganda Securities Exchange, MTN’s offer will contribute to deepening the Ugandan and East African’s capital markets by enhancing public access to the growing stock market.

The IPO closed on 22 Nov with shares trading on 6 Dec. The telecoms company boasts 15 million subscribers who use its voice and mobile money financial services - a segment seen as the most promising growth areas.

The company’s main rival is Airtel, a subsidiary of India’s Bharti Airtel. There is more market up for grabs between the two operators in the Ugandan market to be left by Africell, which has indicated it could be quitting the Ugandan market.

MTN Group has committed to invest proceeds from the IPO in network expansion in the next three years to enhance the quality of services to its customers.^[1]

Uganda is the fourth MTN operating market to get listed in Africa after ^[2] MTN Nigeria, MTN Ghana and, MTN South Africa. it joins a growing list of African tech companies that have gone public in recent years.

ISH, the African operator of mobile phone masts listed on Wallstreet in October in its second attempt at an initial public offering, becoming the largest Africa-focused company on the US market. Companies managing towers for mobile telecom transmitters have become popular on stock markets due to their growth prospects and predictable cash flows.^[3]

Other tech companies that have done IPOs this year include data management company, Informatica, UK fintech firm Wise, cybersecurity provider SentinelOne, Israeli workplace management software maker Monday.com as well as Coinbase, the company behind the popular cryptocurrency exchange, among others.^[4]

MTN Uganda will be hoping to replicate the success of Safaricom, Kenya’s leading mobile operator which listed through an IPO in 2008. It remains the region’s biggest company in terms of profitability and market capitalization. It’s share price has grown from US$0.05 (5 Kenya shillings) to current price of US$0.4 (40 Kenya shillings).