MTN Uganda rides on thirst for telecoms stocks in East Africa
MTN Group shares sale in Uganda attracted oversubscription courtesy of incentives dangled including free stakes and inclusion of the new shares in the company’s latest dividend.
A continued thirst for telecoms stocks has seen a bullish run of MTN on the Uganda Securities Exchange (USE), earning investors some 71 percent appreciation in value in the past half year.
The trend had propelled MTN Uganda from the fifth to the second most valued company in East Africa, according to the Bloomberg Index for January 14.
The MTN stock closed at Ush289.99 ($0.079) a share, representing a 71 percent change compared with the average Ush170 ($0.046) six months ago.
That lifted the company’s market value from $1.008 billion at the end of 2023, to $1.8 billion on Tuesday – leapfrogging three positions to become the second most valued company in the region, after Kenya’s Safaricom, whose market valuation stood at $ 5.7 billion.
Analysts attribute the stock’s bullish performance to a combination of sustained institutional demand since the company completed its secondary share offer, which was oversubscribed nearly 100 percent last June, solid financial performance and regular dividend pay-outs which, besides giving investors good return, also provided cash flow relief.
“Since the company closed its secondary share offer, we have seen a lot of institutional demand,” said Grace Semakula, CEO of SBG Securities Uganda.
“The offer was oversubscribed and we see continuing demand from investors seeking a position in the telecom sector. Additionally, MTN’s results have been positive, payment of dividends has been regular supporting investors cashflows thus making the stock attractive.”
Other commentators said Uganda’s liberal foreign exchange policy and resultant liquidity, and initial headwinds to Safaricom’s foray into the Ethiopian market, had made MTN the stock of choice for investors who are keen on placing their bets on the telecom sector.
MTN Uganda has been the most traded stock on the Uganda Securities Exchange over the three months period from October 10, 2024 to January 13, 2025. The company moved 62.4 million shares valued at Ush14 billion ($3.8 million) over the period, with an average of 990,705 traded shares per session. A volume peak was achieved on November 7, 2024, when 39.4 million shares were sold in a single day.
According to African Exchanges, the MTN stock, which opened on December 6, 2021 at Ush200 ($0.054) per share, has seen its price surge from Ush181 in mid-September 2024 to Ush288.50 ($0.078) on January 13, 2025.
MTN first went to the market in December 2021, with an IPO for 20 percent of its stock. The IPO sold short by 7.03 percent, prompting a return to the market last May. The secondary offer, concluded between May 27 and June 10, 2024, was oversubscribed with applications for three billion shares, against the 1.6 billion that were available.
The company, which had 20.7 million subscribers at the end of June 2024, announced a profit after tax of Ush295.7 billion, half of which was paid out in an interim dividend of Ush6.6 per share ($0.0018). The Q3 earnings call announced subscribers at 21.6 million and Ush459.4 billion in profit after tax, earning shareholders a second interim dividend of Ush7.5 ($0.0020).
For the company’s largest indigenous stockholders, NSSF Uganda and MTN Uganda board chair Charles Mbire, the market movements have resulted in gains of $85,772,636.93 and $29,211,464.45 respectively. This is the biggest gain by any stock in the nearly two and half decade history of the USE.
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