MTN Uganda’s recent secondary market offer has been significantly oversubscribed, according to a notice published on Thursday. The offer received applications for at least 1.42 billion shares, exceeding the available shares by 52.4%.
On June 3, MTN made 1.57 billion residual shares available for sale. This action was in response to regulatory obligations requiring the telecom company to sell any unsold shares from its Initial Public Offering (IPO) within three years of listing on the Uganda Securities Exchange (USE). The offer attracted over three billion applications, which is a positive development for MTN, especially after the undersubscription of their IPO.
The 1.57 billion shares represented 7.03% of the total 20% offer that MTN had floated during the IPO in August 2021. To facilitate the sale of these unsold shares, MTN suspended trading in its shares at the USE. The shares were held by MTN’s parent company, MTN International.
MTN was officially listed on the Uganda Securities Exchange in November 2021, following the completion of share allotment from the IPO, where 4.5 billion shares were offered as part of a licensing requirement. The National Broadband Policy mandates that MTN and other telecom companies open up part of their shareholding to Ugandans.
The November 2021 IPO was undersubscribed, selling 2.9 billion shares out of the 4.5 billion available. This was the first time an IPO had been undersubscribed in the history of the USE, which was established in 1997. Despite the undersubscription, the IPO mobilized the largest amount of capital in the history of the USE, raising Shs532 billion.
The notice on Thursday also indicated that MTN had lifted the voluntary suspension of trading in its shares at the USE, effective June 13. The strong performance of the offer resulted in the availability of 1.57 billion shares against applications for three billion shares. MTN stated that detailed results of the offer would be available by June 20, 2024.
The new offer was designed to attract investor participation, coming at a time when equity investors have faced declining returns. Telecom companies like MTN remain some of the most reliable investments on the Uganda Securities Exchange.
Both MTN and Airtel boast high profit margins and significant revenue growth, enabling them to pay generous dividends to their shareholders.
In a related development, Airtel Uganda also conducted an IPO last year, reducing its parent firm Airtel Africa’s stake from 100% to 89.11%. Airtel Africa, which sold shares at Shs100 each, is also expected to conduct a secondary offer to sell at least 9.11% of unsold shares from its IPO.
