|Ugandan President Yoweri Museveni
The Yoweri Museveni administration in Uganda has ordered all foreign telecom companies operating in the country to list their shares in the local stock market. Telecom companies make huge profits, most of which they send back to their home countries.
The Museveni government believes having the foreign-owned telecom companies list their shares in the local stock market will allow domestic investors to share in the companies’ profits.
MTN Uganda is the leading telecom operator in Uganda with more than 10 million subscribers. MTN Uganda is a subsidiary of South African multinational MTN Group. The Museveni administration has given MTN Uganda until July 2022 to sell at least 20% of its shares in the Ugandan stock market.
The administration will allow investors across East Africa, not just Ugandans, to participate in the MTN Uganda IPO.
“The shares are restricted to Ugandans, and also citizens from the East African Community (EAC),” Ibrahim Bbosa, spokesman for the Uganda Communications Commission told Reuters.
Kenya is one of the East African Community member states. The others are Tanzania, Rwanda, Burundi and South Sudan.
Allowing investors across the East Africa to participate in MTN Uganda IPO is expected to generate sufficient demand for the shares. That should prevent a scenario that played out in Tanzania in 2017.
The Tanzanian government shut out everyone but citizens of the country to participate in the purchase of shares sold by foreign telecom companies. But that resulted in low demand, forcing the government to invite foreign investors to save the situation, hence defeating the goal of the forced stock sale.
Besides MTN Uganda, the other foreign telecom companies expected to list their shares in the Ugandan stock market include Airtel and Africell.
Notably, MTN Uganda IPO could open a second chance to Kenyan investors who missed Safaricom IPO. Safaricom went public in 2008 at Ksh5 a share (foreigners purchased the shares at Ksh5.5 apiece). The shares closed at Ksh28.10 last Friday (July 24), implying more than 460% return for Safaricom IPO investors.
Finally, Kenya’s stock market operator, the Nairobi Securities Exchange, has explored forcing successful private companies in the country to list their shares to allow domestic investors to also partake in their profits. Notably, such a move could also allow the exchange operator to make up for delisted stocks. The NSE has lost eight stocks in the past six years. The exchange could lose more stocks as Kenya Airways and Transcentury prepare to delist.