Airtel in ‘discussions’ over listing on Stock Exchange

A man walks past Airtel head office in Kampala. The telecom intends to list on the Uganda Securities Exchange this year. PHOTO | RACHEL MABALA 

What you need to know:

  • Mr David Birungi, Airtel’s public relations manager while speaking to Daily Monitor confirmed the development, but did not divulge details maintaining the company, “will inform the public when discussions are complete.”

Airtel Uganda has said ‘discussions are going on internally’ about when to begin the listing process for the company’s 20 percent shares on the Uganda Securities Exchange.

Mr David Birungi, Airtel’s public relations manager while speaking to Daily Monitor confirmed the development, but did not divulge details maintaining the company, “will inform the public when discussions are complete.”

A report from the East African newspaper indicated that Airtel’s 2020 financial results showed that teleco paid $78 million, in October 2020, to the Uganda Communications Commission (UCC) to renew its Public Service Provider Licence (PSP).

In August 2018, Airtel submitted an application for renewal of the Public Service Providers Licence as required by law.

The five-year term of the PSP licence under which Airtel has been providing voice and data services elapsed on 17 October 2018. Following a one-month extension whilst negotiations between the UCC and Airtel Uganda regarding the renewal of the licence were ongoing, subsequently expired on November 17, 2018.

In December 2018, the PSP licence was officially extended for a term of one year, until 16 October 2019, on the same terms and conditions of the prior PSP licence.  

Airtel is expected to sell at least 20 per cent of its shares through an Initial Public Offer to fulfil a requirement under the National Broadband Policy.

Requirement to list

According to UCC, the requirement for listing must be within two years from the date of issuance of the licence undertaken in accordance with the existing listing rules as prescribed by the Uganda Capital Markets Authority.

Mr Birungi confirmed that Airtel renewed its licence in 2020, but did not reveal the financial figures incurred.

This, therefore, means Airtel has a few months to hit the deadline of two years for the listing to take place.

Capital Markets Authority, the overseer of the listing process, has not yet confirmed when the process is expected.

However, a close source at the Uganda Securities Exchange said the process will begin in the third quarter of 2022.

Airtel is listed else across Africa in Zambia, Tanzania, Nigeria, and Malawi.

However, the teleco has recently been more cautious of public listings according to a published document in 2019.

A 2019 Airtel Africa Registration document shows the company warned about the legal requirements to undertake a listing of all or some of the shares of the Group’s operating subsidiaries on a local stock exchange.

“The need to comply with these requirements could impact the ability of the Group to achieve its strategic objectives, “ Airtel wrote, “…for example, to the extent that intra-group transactions are subject to additional requirements, or could entail costs and burdens which could have an adverse effect on the Group.”

For instance in 2019, the document shows that Airtel Zambia took several steps including placing orders in a book-build process for a further 6.36 percent and making 21.36 percent  of shares available to the public for purchase via a central depositary scheme.

 As a result of various factors, including potentially insufficient liquidity in the Zambian economy in general, resulting from a lack of investors with sufficient capital to subscribe for the shares, and other factors affecting demand for the securities, Airtel Zambia’s float had not reached the required 25 percent.

Airtel which has not yet announced its share offer will become the second telecom to list after MTN’s listing in October last year.

Initial public offer      

An Initial Public Offer (IPO) shines the spotlight on other companies on the bourse from new investors or investors liquidating positions from one counter to a new one.

According to UCC, the requirement for listing must be within two years from the date of issuance of the licence undertaken in accordance with the existing listing rules as prescribed by the Uganda Capital Markets Authority.

Implications                                                    

A 2019 Airtel Africa Registration document shows the company warned about the legal requirements to undertake a listing of all or some of the shares of the Group’s operating subsidiaries on a local stock exchange.

“The need to comply with these requirements could impact the ability of the Group to achieve its strategic objectives, “ Airtel wrote, “…for example, to the extent that intra-group transactions are subject to additional requirements, or could entail costs and burdens which could have an adverse effect on the Group.”

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