Unsold Airtel shares up for grabs in two years 

In November last year, Airtel was listed on the Uganda Securities Exchange. The telecom hopes to sell unsold shares in a secondary offer due in November 2026. Photo / File 

What you need to know:

  • Airtel says a balance of 9.11 percent or 3.64 billion shares that remained unsold during the initial public offering will be sold by or before November 2026

Airtel has indicated that it has received a regulatory extension for the sale of its unsold shares from the initial public offering to at least November 2026.

The shares, which are currently held by majority shareholder Airtel Africa, represent a 9.11 percent stake. 

They will be sold through a secondary offer to comply with a statutory requirement, in which the telecom is required to complete the sale of a 20 percent stake to Ugandans. 

In November last year, Airtel was listed on the Uganda Securities Exchange (USE) after completing an initial public offering that had been extended by two weeks and an offer of bonus shares, in which it managed to sell 4.35 billion shares or 10.89 percent of the offer. 

A balance of 9.11 percent or 3.64 billion shares remained unsold. However, in its annual report, Airtel Africa indicated it had received a regulatory extension to sell the unsold shares by November 2026. 

USE listing guidelines require a company to sell unsold shares at least within two years of listing. 

The news come slightly over two weeks after MTN announced results of its secondary offer, oversubscribed by at least 1.42 billion share applications. 

The offer, which had announced 1.57 billion available shares, received more than three billion applications, signaling increased confidence in a telecom, whose initial public offering in 2021 had returned an under-subscription.

“On November 7, 2023, Airtel listed 10.89 percent of its shares on the [USE] in compliance with Uganda Communications (Fees and Fines) (Amendment) Regulations 2020, which created an obligation for all national telecom operator licensees to list 20 percent of their shares on the USE. The USE granted Airtel Uganda an extension until November 6, 2026, to offer the shortfall to achieve the 20 percent listing,” the Airtel Africa report reads in part. 

The Airtel initial public offering sold a share at Shs100, in addition to an offer of incentive shares on a band of subscription volumes, in which retail investors, who applied for more than 2,500 shares, received 10 free shares for each 100 shares allocated, while institutional investors who applied for at least 1.85 billion received 112 free shares for each 100 shares allocated.

However, despite the incentive offer, the initial public offering only managed a subscription of 54.45 percent in a transaction in which National Social Security Fund made a last-minute purchase of 97 percent of allocated shares.

The share price has declined post-initial public offering to trade at Shs70, indicating that Airtel Africa could be forced to offer deeper discounts to meet local ownership requirements in the impending secondary offer.

Airtel, which offers data, SMS, and voice services, has a policy of distributing at least 95 percent of net income as dividends.

In November last year, it joined MTN as the second telecom to list on the USE.  However, despite a high dividend return, the two telecoms have had to highly incentivise their offers to attract investors. For instance, MTN quoted a price of Shs170 for each share in the secondary offer, in addition to bonus shares for each share application. 

Similarly, in its initial public offering in November 2021, MTN offered incentive offers for a volume of shares that had been priced at Shs200 each.