Umeme chairman Patrick Bitature (left) hands over Umeme tools to Energy Minister Ruth Nankabirwa (second left), Electricity Regulatory Authority chief executive officer Ziria Tibalwa Waako (second right), and ERA chairperson Sarah Wasagali Kanabi at “The Big Switch” in March. Umeme and government have since disputed over the buyout amount, which has created anxiety among shareholders. Photo / Isaac Kasamani
Investor sentiment about Umeme tells the story of a cautious market, and the numbers now show it. Umem’s cores remain solid, but as markets often sit back when fear takes the wheel.
Since the USE lifted Umeme’s two-month trading suspension on June 14, the stock has not registered a single trade.
At Shs415 per share, sellers have lined up with 179,700 shares on offer (worth Shs74.5m), but no buyers have stepped forward, according to trading data from Crested Capital, by close of trading on Tuesday.
And for the share price to change, at least 100 shares have to exchange hands either above or below the current Shs415.
In markets, perception trumps fundamentals. If, for instance, policy signals grow murky or government communication turns fuzzy, investors lose confidence.
It happened to Kenya Power before.
“Lots of shares on offer, but no buyers - that tells you all you need to know,” says financial markets consultant Andrew Mwiima, highlighting the uncertainty “over what shareholders will receive”.
“For any trade to happen, someone must be comfortable buying in. Right now, they’re not,” he adds.
The uncertainty stems from a legal battle in London over Umeme’s buyout amount.
With no resolution and no dividend, buyers are sitting it out. To make matters worse, even the long-delayed 2024 financials, released last Friday, offered no comfort. They revealed deep losses.
Broken on paper
One of the shockers in Umeme’s 2024 financial results is Shs361b lost under something called "expected credit losses."
Umeme believes government owes it Shs1.05 trillion as part of its exit deal.
But since government is disputing part of that amount- specifically, Shs329b - accounting rules say: “Until you are sure you will get that money, act like you won’t”.
So, Umeme had to record it as a loss, just to be safe. But the additional credit loss - Shs32b - likely came from other smaller provisions.
Umeme further wrote off Shs699b held in long-term assets such as software and systems, which, in accounting, even when they are still working, are treated as not being useful once the license ends.
The good news is, Umeme had paid off all its loans by 2023, so it saved a lot on interest, about 35 percent less.
Also, because it showed a big loss, government gave it a Shs92b tax break. That is how it went from making Shs11b profits in 2023 to a loss of Shs511b in 2024.
On paper, Umeme also lost so much value that its retained earnings - basically its savings - fell from Shs609b to negative Shs70.3b.
And overall shareholder equity (the value left for shareholders) was slashed by 75 percent, falling from Shs937b to just Shs241b.
The dividend dilemma
To make things even trickier, Umeme paid out Shs169.2b in interim dividends in 2024, but the decision was based on earlier projections. Once the numbers told a different story, the company hit pause.
The board stopped declaring any new dividends, signalling it now needed to hold onto cash to survive the uncertainty ahead.
“The directors do not recommend a final dividend for 2024,” Umeme said in a commentary accompanying its 2024 financials.
So what does this mean for investors?
Well, it all hinges on one thing: whether Umeme wins or loses the case over the Shs1.05 trillion buyout.
If Umeme wins the arbitration, it would be like a giant cheque landing on the company’s desk - instantly rebuilding the company’s value, refill accounts, and possibly allow Umeme to pay out big returns.
But if it loses, the story turns grim. The money would be gone for good, even if there is a rightful claim.
It would be left with very little value and no major business since the concession ended, and for shareholders, that could mean losing out.
What makes Umeme’s case unusual is that it’s no longer running any active utility business, since its 20-year license ended on March 31, 2025, and has handed back the physical assets to government.
So what is left?
Essentially, just a legal claim - a fight for what Umeme believes it is owed.
The company is now waiting for an arbitral decision in London, hoping to be awarded the buyout amount it believes it deserves. That ruling could take months - or even years. It's a rare and high-stakes case.
For years, Umeme was the crown jewel of the stock markets - the most liquid, dividend-rich, and institutionally trusted counter on the USE. It floated 100 percent of its shares to the public, a rare move, and consistently paid generous dividends, accounting for more than half of market turnover.
But as of 2025, that golden goose appears to have been gutted.
The turning point was structural, not operational. Its only significant remaining asset is a disputed buyout claim worth Shs1.051 trillion ($292m).
In the lead-up to expiry of the concession, many investors were still clinging to the stock, expecting a generous final dividend.
The USE has twice suspended trading on Umeme’s counter over growing uncertainty.
But within days of lifting the suspension, company had declared no final dividend, and the tone of its disclosures revealed that the payout from government was far from guaranteed.
Thus, naturally, investor sentiment turned cold, with those who had expected a smooth exit left jittery.
Investor frustration
There is evidence that many investors expected a high final dividend, buoyed by past trends.
Umeme’s dividend per share had risen steadily over the years: Shs54.10 (2021), Shs63.90 (2022), and Shs78.20 (2023).
Crested Capital projected Shs75–90 per share for 2024. But Umeme only paid an interim dividend of Shs26, then cancelled the final.
The disappointment was significant—not just financially, but psychologically, because for many, this was supposed to be the exit celebration.
Speculative opportunity or value trap?
Opinions are split. Some investors and analysts, like Gitta Expedito and Malinga Joseph Kirk, argue that this price collapse presents a massive buying opportunity.
Their thesis is simple: the market is panicking, but the underlying legal claim is strong.
“There are no bad assets, only bad prices,” Gitta and Malinga write.
“Buying Umeme shares at extremely low prices is like buying a presidential Land Cruiser TX for only Shs100m when it’s worth over Shs800m,” he adds.
They believe a worst-case payout of Shs500 per share is likely if Umeme wins the case, and even a Shs800–1,000 per share payout isn't impossible in the best-case scenario.
They estimate the arbitration may take six to 24 months, and long-term holders stand to win if they can stomach the wait.
They also argue that selling now only benefits brokers (who take a 4.2 percent cut on both sell and buy transactions), and re-entering at a lower price is easier said than done when emotions and fear are high.
Uncertainty
But not everyone buys the optimism. Other market watchers take a more skeptical stance, pointing to Uganda’s track record with state obligations, where “things are often not as they appear”.
The fear is that even if Umeme wins, payment delays or negotiations may drag on.
Plus, there’s the possibility - however slim - that the case could go either way.
Also, the fact that Umeme’s financials for quarter one of 2025 (after the concession ended) are not yet public, investors have incomplete information.
“The board and management are committed and fully focused on this recovery process to ensure the preservation and protection of the interests of … its shareholders,” Umeme noted in a statement last Friday.
Until the ruling is made, buying or holding Umeme stock is not a traditional investment decision - it’s a speculative legal bet, with potentially high returns, but also real risk of permanent loss.
