Airtel IPO to close tomorrow amid mixed market sentiments
Airtel will be the 10th local company to list on the USE, which currently has nine domestic listings and eight cross-listed companies. Photo / File
What you need to know:
- The IPO, which opened at the close of August, came after a 12-month delay, due to a volatile economic environment
Airtel’s initial public offering (IPO) is expected to close tomorrow, ending more than a month of share trading, in which the telecom is seeking to raise Shs800b.
The IPO, which opened at the close of August, had come after a 12-month delay, due to a volatile economic environment.
However, financial market analysts, have said they are optimistic that the IPO will post good results even as it came at a time when inflationary pressures had been increasing, amid a downturn in economic activities, which in turn has affected performance of the Uganda Securities Exchange (USE).
“The stock market can be volatile in the short-term, but it has historically trended upwards over the long term,” Mr Alex Kakande, an equity investor said, noting that there are a number of good companies that are trading at attractive prices, which presents an opportunity for future listing.
Airtel will be the 10th local company to list on the USE, which currently has nine domestic listings and eight cross-listed companies. In August Airtel floated eight billion shares at a price offer of Shs100 per ordinary share, which was a fulfilment of the law under the National Broadband Policy.
As a licensing requirement, the policy demands that telecoms list on the USE to share a part of their profits with Ugandans.
Airtel, which is valued at Shs4 trillion, will also be the second telecom to list on the USE after MTN, which listed in December 2021.
However, both companies excluded their mobile money businesses from the IPOs, given that they are now operated independent of mobile telecommunication services.
The IPO has had muted activity, with analysts pointing to low sensitisation, worsened by a volatile economic environment that in the last four years has seen high drops in IPO prices among listed companies.
For instance, Cipla has experienced one of the largest declines in share price, with the IPO price falling from Shs256.5 to Shs65, while that of MTN has declined from Shs200 to Shs170.
“It boils down to how the IPO was made, whether there were more retail or institutional investors,” Mr Andrew Mwiima, a financial markets analysts, said in relation to share price declines.
Prior to the IPO, Airtel indicated that its 95 percent dividend policy was sufficient to attract investors to invest into its stock.
The company also indicated that its after-tax earnings had increased from Sh83.3b in 2018 to Sh139b in 2021, but even as it declined to Sh106.2b in 2022, it remained attractive to investors.
