Airtel’s Initial Public Offering (IPO), which began at the end of August, is about to end, concluding more than a month of share trading. During this time, the telecom company aimed to raise Shs800 billion. The IPO was initially delayed for a year due to an unstable economic environment.
The IPO opened amid a challenging economic situation characterized by rising inflation and decreased economic activity, impacting the performance of the Uganda Securities Exchange (USE). Despite these challenges, financial market analysts express optimism about the IPO’s potential for favorable results. They believe that the stock market may exhibit short-term volatility but has historically shown long-term growth. Some analysts also note that there are attractive opportunities for future listings as several strong companies are currently trading at appealing prices.
Airtel’s IPO represents the 10th local company to list on the USE, which already has nine domestic listings and eight cross-listed companies. In August, Airtel offered eight billion shares at a price of Shs100 per ordinary share, aligning with the National Broadband Policy, a licensing requirement for telecoms to list on the USE and share profits with Ugandans.
Airtel, valued at Shs4 trillion, will be the second telecom to list on the USE, following MTN’s listing in December 2021. Both Airtel and MTN excluded their mobile money businesses from their IPOs, as these services now operate independently of mobile telecommunications.
The IPO has seen limited activity, attributed to low public awareness, worsened by the volatile economic environment of the past four years. This period witnessed substantial drops in IPO prices for listed companies. For example, Cipla’s share price decreased from Shs256.5 to Shs65, and MTN’s declined from Shs200 to Shs170.
Market analysts suggest that the success of an IPO may hinge on the balance between retail and institutional investors. Prior to the IPO, Airtel assured investors by stating that its 95 percent dividend policy was an attractive feature. The company also noted that its after-tax earnings, which rose from Shs83.3 billion in 2018 to Shs139 billion in 2021 but decreased to Shs106.2 billion in 2022, still made it an appealing investment.
