MTN Uganda mulls further sale of shares

MTN remains confident about its operations in Uganda and may offer a further 7% of the company to the public, even as the global economic downturn has affected the group across a number of its operations.

“According to the central bank, Uganda is poised for a more favourable macroeconomic outlook, with economic growth of 6% expected for the [2024] year and inflation forecast to remain below 5%,” MTN Uganda CEO Sylvia Mulinge said at the company’s annual earnings presentation.

“As we continue to execute our Ambition 2025 strategy in this context, we remain alert to the potential risks and headwinds to the outlook, focused on unlocking further efficiencies and disciplined capital allocation.”

Like other countries, Uganda has been affected by rising living costs, though the situation is easing with inflation averaging 5.5% and the local currency depreciating by just 1.8% in 2023. 

Ambition 2025 is the group’s strategy focused on growing alternative revenue lines such as mobile money, reducing debt and exiting noncore businesses. It is also seeking to increase local ownership of its operating companies and meet its licence obligations.

As part of that effort in Uganda, Mulinge said that over the course of 2024, “we will explore a further sell-down of 7% shareholding to the public to broaden Ugandan shareholding and provide an opportunity to investors to own a stake in the company”.

MTN Uganda started trading on the country’s stock exchange in December 2021 after an initial public offering that raised R2.4bn, the largest such amount in the East African country at the time. The company is the biggest by value on the exchange 

The listing reduced MTN Group’s stake in the Uganda unit from 96% to about 83%. 

The potential sell down comes as Uganda’s largest mobile operator reported 16.1% growth in service revenue grew to 2.63-trillion Ugandan shillings (about R12.7bn) for the year to end-December 2023. After-tax profit increased 21.4% to 493bn shillings, and data revenue rose 21.6% to 621.9bn shillings. 

Active data subscribers rose 22.4% to 8.2-million, lifting earnings before interest, tax, depreciation and amortisation (ebitda) by 16.3% to 1.37-trillion shillings. Overall, subscriber numbers rose 13.3% to 19.5-million for the period.

Capital expenditure, excluding so-called right of use assets, increased by 5.5% to 353.5bn shillings. 

MTN Nigeria, the group’s largest business unit reported last week that it has been hit by a weaker Nigerian naira, which has lost more than 90% of its value over the course of 2023, dragging down its full-year earnings. 

A similar story was been reported for the Ghana operations earlier in the same week. 

In both cases, the mobile operator managed to increase up revenue and subscribers numbers. 

gavazam@businesslive.co.za