With Ugandan shareholders in MTN, the Ugandan economy will suffer less from the shock of profit repatriation

Ugandans own 15% of MTN

December 14, 2021 8:38 PM

Billionaire Warren Buffet once said, “It's far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”

MTN

That quote sums up how Ugandans have delved into buying stock from MTN. As things stand, Ugandans now own 15% of MTN Uganda which, to many, is a wonderful company.

After the successful completion of the MTN Initial Public Offering, Ugandans grabbed at a chance to buy shares in MTN after it was listed on the Uganda Securities Exchange.

To get its second national telecom operator license, as a regulatory measure, MTN was required to be listed in accordance with the national broadband policy of 2018.

This policy is aimed at increasing local participation in the telecom sector.

After its listing, MTN opened its doors to Ugandans to share in its success story which originally only comprised 4% local ownership prior to the Initial Public Offering (IPO).

With Ugandan shareholders in MTN, the Ugandan economy will suffer less from the shock of profit repatriation while being buoyed by profit retention in the country.

To give an even clearer picture of what this means for the economy, MTN successfully raised $150million (UGX535 billion) in its IPO.

According to Uganda Securities Exchange, this is the largest amount of capital raised via the Exchange in an IPO or singular secondary market offer since its inception.

This process was helped along by the fact that it was digitized.

Adding grist to this mill, local shareholders holding a 15% stake in MTN Uganda will access dividend payouts by the telecom subject to the company’s dividend policy.

This, naturally, spells positive cash flows in an economy now awash with liquidities that may be re-invested or saved to grow money at a micro-level level in the short, medium and long term.

MTN Uganda Chief Executive Officer, Wim Vanhelleputte said MTN successfully attained the local participation in the shape of 20,894 investors, 87% of the 21,394 total applicants for shares were Ugandans.

Mr Paul Bwiso, the Chief Executive Officer USE said: “During this period, over 74,000 SCD accounts were opened with the USE SCD growing the number of SCD accounts held by the USE SCD from approximately 38,000 accounts pre-IPO to 113,421 accounts to date. This reflects a 195% increment in accounts.”

All this, as Warren Buffet would say, was done at a fair price at 200 Ugandan shillings per share.