Airtel Uganda Limited expects to raise as much as Shs800 billion ($215.2m) in an initial public offering, which would value the telecom at Shs4 trillion (nearly $1.1bn).
The company is offering eight billion shares, equivalent to 20 per cent of its total stock, on the main investment market segment of the Uganda Securities Exchange, and expects an IPO price of Shs100 per share, according to an IPO filing Tuesday. The issue opens on 30 August and is scheduled to close on 13 October. Trading in the company’s stock is expected to begin on 31 October.
Airtel’s IPO is the first on the local bourse since December 2021, when MTN Uganda, its only major local competitor, listed. MTN had also sought to sell 20 per cent of the Ugandan operation on the USE – 4.5 billion shares at Shs200 each – but the issue was undersubscribed by 40 per cent.
Airtel said the listing will create “a source of future capital” to finance its expansion plans and give an opportunity to Ugandans to “own a share in the company and participate in its future growth.”
It also acknowledged that the issue is a regulatory requirement, intended to, among others, boost the country’s capital markets. “Under Article 16 of the National Telecommunication Operator licence, the company is obliged to comply with the sector policy, regulations, and guidelines requiring the listing of part of its shares on the USE,” said Airtel.
ABSA Bank Uganda Limited is leading the offering.
Airtel launched its Ugandan operation in 2010 after taking over Zain Uganda. The company’s beneficial owners are India’s Bharti family through Bharti Enterprises (Holding) Private Limited. The Bharti family is the majority shareholder in several holding companies overseeing subsidiaries in South Asia and Africa, including the London-listed Airtel Africa plc, the majority shareholder in Airtel Uganda; it will retain at least 80 per cent of its stake after the IPO.
The company offers telecommunications services, with most of its revenue generated from mobile voice and data. The similarly branded Airtel money business is not part of Airtel Uganda Limited (and the IPO).
Airtel’s mobile money service is run by Airtel Mobile Commerce Uganda Limited, following the separation of the telecom and mobile commerce businesses in 2021 to comply with a law, enacted in 2020, regulating electronic payment services. Airtel Mobile Commerce B.V., registered in the Netherlands, is the sole shareholder in AMCUL.
Airtel Uganda’s IPO offer share price values the company at about 12.5 times its net income for the year ending December 2022. In comparison, MTN Uganda Limited, its main competitor, is trading at 9.2 times reported earnings for the same period. (MTN’s mobile money operations are part of MTN Uganda Limited, in contrast to Airtel Uganda.)
Airtel Uganda posted revenue of Shs1.6bn and net income of Shs326bn in 2022, according to its IPO filing, while MTN Uganda reported revenue of Shs1.7bn and after-tax profit of Shs406bn in the same period.
