MTN Uganda's parent company, MTN Group, has announced a significant discount in the sale of shares worth UGX 7.7 billion (approximately USD 2.1 million), aiming to increase local and regional ownership in its Ugandan subsidiary.
This move aligns with the company's strategy to deepen its presence and investment in the East African telecom market.
MTN Uganda is offering its shares at a discounted rate to attract a wide range of investors, including retail, institutional, and regional participants. This sale is part of a broader initiative following Uganda's regulatory requirements that foreign-owned telecom companies reserve at least 20% of their shares for local and East African investors.
To further motivate investment, MTN Uganda is providing free shares to Kenyan and other East African investors. For every 100 shares purchased, investors will receive an additional five to ten shares at no extra cost.
This effective discount is designed to ensure the IPO's success by boosting subscription rates, with Ugandan investors given priority in case of oversubscription.
MTN Uganda, a subsidiary of the South African-based MTN Group, has been a significant player in Uganda's telecom sector. It has invested heavily in expanding its network coverage, which now reaches 97% of the population.
The company has also been a major contributor to the Ugandan economy, paying substantial taxes and providing direct and indirect employment to thousands of people.
The listing is expected to strengthen Uganda's capital markets by increasing visibility and market capitalization of the Uganda Securities Exchange (USE). This move could enhance investor confidence and attract more investments into the country.
The offering is part of MTN's broader strategy, dubbed Ambition 2025, aimed at optimizing operational efficiencies and disciplined capital allocation amid a favorable macroeconomic outlook in Uganda.
This share sale follows a successful year for MTN Uganda, which reported growth in both revenue and profits, driven by increased demand for data and mobile money services. The company continues to play a pivotal role in the financial inclusion of Ugandans through its mobile money platform, MoMo, which has significantly increased the number of people with access to formal financial services.
Despite the positive outlook, investors are advised to approach the investment with caution, understanding the risks involved as highlighted in the IPO prospectus. This includes potential declines in revenue from voice services, which the company expects to offset through growth in data services.
The IPO will be Uganda's largest, setting a precedent in the region and marking MTN Uganda as the second publicly traded telecom company in the East African Community after Safaricom's IPO in Kenya.
