Uganda joins list of countries forcing IPOs on MTN

Uganda has joined Ghana and Nigeria in making listing on the stock exchange a trade-off with MTN Group. The South African telecommunications giant plans to renew its operating licence in the East African country which expires in October, but it has been told that it has to list some of its shares on the Ugandan Stock Exchange (USE) as a precondition for renewal.

Godfrey Mutabazi, who heads Uganda Communications Commission (UCC) told Reuters that having operated its business profitably in Uganda for 20 years, it was only fair for MTN to allow Ugandans own part of it.

“We are evaluating the conditions of (licence) renewal and that’s [listing shares on USE] one of the points we are discussing,” he told Reuters. “They have not shown any resentment to that proposal at all,” Mutabazi added.

“MTN is an investor here and they have been here for 20 years[…], I would argue that they have been here long enough they should be identified as Ugandans and the only way to do that is to list so that Ugandans can have a stake in that company,” the UCC head said.

“They should warm to the government desire to have some of their shares listed.”

In its 20 years in Uganda, MTN has dominated the market, with subscriber base growing to 10.7 million despite regulatory related disconnections that made the company disconnect 750,000 subscribers. Revenues also surged to $357.12 million in 2017.

While MTN listing on USE will be good for the bourse, Initial Public Offerings (IPOs) are usually conducted at the discretion of the owners of a company, hence a forced IPO leaves a bad taste.

Uganda is not the first country to impel MTN to list on its local stock exchange. Ghana had in 2015 added listing shares on the Ghana Stock Exchange as part of the terms of a 4G licence in the 800 MHz spectrum, which MTN bid for and won. That same year, Nigeria slammed a $5.2 billion fine on MTN for not meeting a deadline for disconnecting subscribers with improper registration. As part of a deal to reduce the fine, the telco agreed to list its stock on the Nigerian Stock Exchange. The last tranche of the reduced fine will be paid on 31 May, 2019 in line with the company’s agreement with the Nigerian government. MTN also has to list its shares on NSE before that deadline.

MTN Group is a profitable company. It declared a profit of $313.06 million in 2017 and has already made a revenue of $4.3 billion in the first six months of 2018. It is, therefore, understandable when countries want more than just tax from the South African firm. However, there is need for standards to be set and not arbitrary request for companies to list. In the United States, the Securities and Exchange Commission sets standards for when companies must accept forced IPOs. African regulators should set similar standards and stop forcing IPOs on companies.