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MTN Uganda offers exit option for retail investors
MTN said the organised sale of shares under the opt-out plan will not interfere with normal trading of the company’s shares on the Uganda Securities Exchange (USE).
MTN Uganda has opened an exit path for shareholders who do not wish to hold a stake in a new entity that will house the company’s mobile money unit after it is separated from its telecommunications operation.
The separation plan calls for the mobile money business MTN MoMo to be moved to an entity known as MTN New FinCo, in which existing minority shareholders with a combined 23.99 percent stake in the telco will hold a similar interest through a special trust.
In a supplementary circular ahead of a shareholder vote on the proposed separation, the company said it will facilitate the sale of shares through the open market at the Uganda Securities Exchange (USE) for those not wishing to join the trust. The opt-out shares will be sold at the listed counter price of the company at the USE.
Once the separation is approved by regulators and shareholders at a special general meeting, MTN Uganda will set up a platform on which dissenting shareholders will exercise their individual opt-out option, within a 14-day window.
MTN Uganda counts among its minority shareholders a number of Kenyan retail and institutional investors who bought in when it held its initial public offering (IPO) in 2021. They include the National Social Security Fund (NSSF), the Central Bank of Kenya Pension Fund and businessman Baloobhai Patel.
“For retail minority shareholders who expressly elect to opt-out and sell their shares, MTN shall work with the licensed brokers to facilitate the sale of the shares on the secondary market … these sales shall be completed within three to five days,” said MTN in the supplementary circular.
“In the event that MTN and the brokers assess that there is no ready market for all or part of the opting-out shares, MTN shall co-ordinate with the brokers to ensure that the relevant unplaced shares of the opting-out minority retail shareholders are sold to existing shareholders (including institutional investors) and/or third parties.”
The MTN stock is currently trading at Ush261.06 (Sh9.38), having gained from its 2021 IPO price of Ush200 (Sh7.19). The opt-out option is likely to be beneficial for institutional investors who may get a chance to build their stake from retailers incentivised to take a profit from the current high share price compared to IPO levels.
MTN said the organised sale of shares under the opt-out plan will not interfere with normal trading of the company’s shares on the USE.
Under the separation plan, the MTN New FinCo will eventually be listed as a separate entity on the USE at a price based on the value of the business at the point of listing by introduction –where no new shares will be sold to the public.
Minority shareholders will then have two separate interests in two separately listed companies –MTN Uganda and MTN New FinCo.
The two businesses have comparable net profit margins of about 26 percent, with the telecommunications operation having larger revenues and earnings. Mobile money is, however, seen as presenting more growth opportunities from its extensible applications in diverse areas including payments, credit, savings, micro insurance and investments.
The telecommunications division reported a net profit equivalent to $193.4 million (Sh25 billion at current exchange rates) in the year ended December 2024 when its total revenue stood at $725.7 million (Sh93.8 billion). MTN MoMo meanwhile posted a net income of $69.6 million (Sh9 billion) on revenues of $273.4 million (Sh35.3 billion).
