MTN Group, the pan-African mobile network operator, has reopened an offer to sell a 7% stake in its Ugandan subsidiary to increase local ownership after it failed to offload a fifth of its shareholding in the December 2021 IPO. The 2021 IPO, which sought to reduce MTN Group’s then 96% shareholding by 20% to comply with licensing requirements, raised 536 billion Ugandan shillings ($151 million) and was undersubscribed by 64%.
Like in 2021, MTN Group opened the sale of shares to Ugandan and East African investors at a discounted price of 140 Ugandan shillings ($0.037). The offer, which will go on until 10 June, is expected to help the company attain the regulatory requirements of at least 12.97% local ownership.
MTN Group currently has an 83% shareholding in the Uganda subsidiary, which is the largest company on the Uganda Stock Exchange (USE) by market capitalisation. If it manages to offload the 7% holding, it will remain with a 76% stake.
“The offer is being undertaken to comply with the requirements of the company’s national telecommunications operator licence, the National Broadband Policy 2018, and the regulations issued by the Uganda Communications Commission,” MTN Group told shareholders on Monday.
Under new telecommunication rules in Uganda, all telcos operating in the country are required to list on the USE. However, telcos have been faced with poor responses from investors, leading to undersubsription of their IPOs.
In 2023, Airtel Uganda’s IPO was also undersubscribed by 45%, raising 211.43 billion shillings ($56 million). The company blamed the poor performance of the IPO, which was delayed by a year, on a tough economic environment.
In its Q1 results, MTN Uganda recorded a profit after tax of $39.5 million (150 billion Ugandan shillings), driven by revenue growth in its voice, data, and fintech segments, a performance which provides hope that shareholders will sweep all the shares on offer.