Vodacom’s $213m IPO extended until July 28

Thursday July 27 2017

A Vodacom retail store. The telecommunications

A Vodacom retail store. The telecommunications firm launched its IPO for its Tanzanian subsidiary in March. PHOTO FILE | NATION 

By ALLAN OLINGO
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Vodacom Tanzania has for the second time extended its initial public offering to the end of July to allow foreigners to participate, hoping this will excite investors and enable it to hit its $213.07 million target.

In a statement, the firm said it had received approval from Tanzania’s capital markets regulator to extend the offer period to July 28, a week after Tanzania changed its laws to allow for foreign participation in buying shares on its Dar es Salaam Stock Exchange (DSE).

“This extension will help ensure participation by international investors,” Vodacom Tanzania said in a statement. Through the revised schedule, it hopes to list at the DSE tentatively on August 15.

“The extended offer period closes on July 28, 2017, after which we expect the allotment and delivery of the register to the DSE and announcement of offer results on August 7.

"Thereafter, it will take two weeks for the processing of refunds and printing of CSD receipts before the actual listing takes place the day after,” it said.

The telecommunications firm launched its IPO in March, and it was initially restricted to local investors. A slow uptake saw the firm extend the offer period in April by three weeks, amid concerns about liquidity in the local market.

Since then the telco has failed to announce the results of the IPO, lending credence to the claims that it could have been undersubscribed.

A fortnight ago, Tanzania lifted a ban on foreigners participating in initial public share offerings in the telecoms industry, hoping to widen the pool of potential investors in several major companies.

This was Dar’s latest attempt to induce investors to take part in the IPO by Vodacom Tanzania.

“Until now, foreigners were unable to take part in a share sale because of Tanzania’s domestic ownership rules. It is our belief that the change will be positive as it is expected to improve the liquidity of the Vodacom Tanzania shares once they list,” Vodacom spokesman Byron Kennedy said.

The decision by the Capital Markets and Securities Authority to allow foreign participation also sent the clearest indication that the government may have shot itself in the foot by rushing firms, including those in the mining sector, to list before policies were in place to boost investor interest.

Tanzania telecoms and mining operators are required by law to ensure 25 per cent local ownership via IPOs at the local bourse.

The government hopes the listings will bring more transparency and offer the public a share in the industry’s profits.

Two other major telecoms operators, Tigo and India’s Bharti Airtel, have also submitted prospectuses to the regulator and are awaiting approval for their IPOs.

In its six months to June 2017 report, the DSE market turnover stood at $15,644 compared with $210,000 in 2016, and $4.48 million the previous year.

The turnover of shares sold by foreign investors also recorded a huge drop to $53,652 in the past six months compared with $1 million over the same period last year.

The DSE’s market capitalisation stands at $8.5 million as compared with $9.6 million the previous year. The capitalisation stands at $3.42, down from $3.49 million last year, while the All-Share Index at the end of last month was 2,217.08, compared with 2,481.99 points the previous year.

The Tanzania Share Index also recorded a drop to 3,692.03, from 3,706.15.

“The future of the stock market is bright. We aim to get at least one million investors in the coming three years, up from the current half a million.

"We will achieve this once we have all the telecommunications and mining firms list at least 25 per cent of their authorised share capital on the DSE,” bourse chief executive officer Moremi Marwa said.