Uganda’s telecom giant, Airtel Uganda, has successfully listed 4.36 billion shares on the Uganda Securities Exchange (USE). This move followed a well-received initial public offering (IPO) that garnered the interest of 4,614 investors. The IPO saw the takeover of a significant 54.45 percent of the offered eight billion shares. Notably, this listing has attracted the most retail investors (4,600) of any offering on the local bourse, indicating growing investor interest.
Despite previous lukewarm responses to local company offerings due to limited resources and inadequate sensitization, Airtel’s IPO managed to pique the interest of a large number of retail investors. The company’s decision to lower the share price for retail investors from Shs100 to Shs47 was instrumental in increasing share take-up. This move promised future effective returns on investment of just under 11 percent, making it an attractive proposition.
Paul Bwiso, the CEO of USE, commented on the surprising lack of investor interest in previous public offerings, stating, “It needs a lot more financial literacy to make more people own shares in public companies.” This underscores the importance of educating potential investors on the benefits and risks associated with investing in the capital markets.
Airtel Uganda’s IPO Attracts Retail and Institutional Investors
During the IPO, a total of 7,000 people opened Securities Central Depository (SCD) accounts, showcasing a growing interest in investment opportunities. This marks a significant increase compared to previous public offerings, with the number of retail investors nearly doubling since Cipla Quality Chemicals Limited was listed in 2018.
The funds raised from the IPO amounting to Shs211 billion will be allocated for capital expenditure and operational infrastructure, enhancing Airtel Uganda’s competitiveness in the market. The listing now values Uganda’s total market capitalization at Shs11 trillion, equivalent to 6 percent of the country’s GDP, and makes Airtel Uganda the second telecom company to go public after MTN Uganda in 2021.
Telecom companies in Uganda are required to list 20 percent of their stake to Ugandans as per their new licenses. This move aims to enhance market competitiveness and liquidity. CEO of USE, Paul Bwiso, believes that Airtel’s listing will attract more foreign investors, who currently dominate the trading of Uganda’s listed companies, representing 60 percent of the total.
Dividends and Future Prospects
In addition to its listing, Airtel Uganda has announced its commitment to paying a total dividend of approximately Shs500 billion for the financial year ending on December 31, 2023. This dividend will be distributed in quarterly payments, according to the company’s prospectus.
Dr. Rachel Mindra Katoroogo, the Chair of the Listing Committee of the USE, expressed her excitement about this milestone, stating, “Today’s event marks a key milestone in Uganda, which will go a long way in our contribution to the capital markets’ national development.” Airtel Uganda’s listing makes it the 11th local listed company on the exchange, further enriching the communication sector’s presence on the exchange and making it the 19th listed company on the USE.
Manoj Murali, MD of Airtel Uganda, described the listing as a historic moment for both the country and Airtel Uganda, culminating years of building the business while offering its services to Uganda. CEO of USE, Paul Bwiso, underlined that Airtel’s listing contributes to the exchange’s capitalization, now totaling 19.8 trillion Ugandan shillings.
Airtel Uganda’s listing represents a significant development in the country’s capital markets, attracting a substantial number of retail investors and strengthening the exchange’s presence in the communication sector. It also reflects the telecom company’s commitment to enhancing its competitiveness and profitability in the market.