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MTN stock price surges by 9% on back of Shs1.4b share purchase
MTN remains one of the most active counters at the Uganda Securities Exchange. Photo / File
What you need to know:
- The MTN stock, whose price has now risen to Shs239.89, has now surpassed the initial public offering price of Shs205
MTN’s share price hit a record high on Monday, fuelled by an institutional investor who snapped up 6.186 million shares from dozens of trades.
The development, market analysts say, could have been fuelled by the telecom’s strong financial position.
Monitor understands the 6.186 million shares were obtained by a fund manager who invested Shs1.4b to scoop up shares from multiple sellers.
Data from the Uganda Securities Exchange (USE) shows that the fund manager sealed 22 deals in the transactions that propelled MTN’s share price surge by 9.04 percent, or Shs19.89, from Shs220 on Friday to Shs239.89 by close of Monday.
The surge had last happened on September 23 when MTN’s share price jumped from Shs181 to Shs197.93.
Monday’s trade favoured the sellers, giving them the upper hand in setting the price, which the fund manager paid an average of Shs240 per share, well above Friday’s closing price of Shs220.
USE declined to reveal particulars of the fund manager but a market analyst from Crested Capital, who asked to stay anonymous to freely comment on the development, said MTN is a solid stock, boosted by an attractive dividend policy that allows it to pay 60 percent of its net profits to shareholders.
“A trade like this carries minimal downside risk, as the share price is unlikely to dip in the near to medium term,” the analyst said.
MTN started the year at Shs170, holding steady until the May 2024 secondary offer, when the company sold 7.04 percent of its shares at Shs140, a 21.43 percent discount to the market price.
Since August, the stock has been rising, surpassing the initial public offering price of Shs205 in December 2021.
One of its appeals has been the generous dividends paid out thrice every year. This year, MTN distributed a total dividend of Shs13 per share.
In July, Ms Sylvia Mulinge, the MTN chief executive officer, said the telecom had paid shareholders Shs864.4b in dividends since its December 2021 listing, with pay-outs growing due to improved performance.
Dividend payments are made in the first half, after nine months, and at the end of the financial year.
It’s because of this, coupled with good governance and potential investors see the business strategy that has allowed it to achieve a turnover of Shs5.5b ($1.49m), ranking third in trading volume on the USE as of October.
Currently, MTN is neck and neck with Stanbic in share volumes traded, though they both still lag behind Umeme, the market’s most traded counter.
Excluding the MTN secondary offer, the market trading hit Shs74.5b by December 15, with the MTN secondary offer itself pulling in Shs220b, which that shot up market activity to Shs294.5b.
Meanwhile, MTN is gearing up to spin off its mobile money business from the listed entity, which will leave the listed entity with only voice and data operations. No details have been provided, but according to MTN’s prospectus, the deal is expected to be wrapped up by 2025.
“This is something investors are eyeing, especially institutional ones,” a financial markets analyst said.
“When MTN spins off [mobile money], we are expecting a special dividend for shareholders - possibly a sweet deal, if you think about it.”
Not new
What happened with MTN shares is nothing new. On December 10, the Quality Chemical Industries Limited stock rose by 12.5 percent, from Shs56 to Shs63 - the highest it’s been since November 2023 when it hit Shs70.
The trade didn’t hit the 15 percent price increase cap set by USE in a day, but it’s still a notable jump.
Why? The company started handing out dividends after being acquired by the private equity firm Africa Capital Works, and investors are buying into the company’s strategy, especially now that it’s cleared its debts.
