Category Archives: NSSF Uganda

MTN Uganda IPO 

MTN Uganda has an ongoing IPO in which they plan to raise UGX 895 billion (US$252 million) from selling 20% of the company to local investors and floating the shares. Like in Ghana and Nigeria before, the listing of shares on the local stock exchange by the leading telecommunications firms in the countries, has become a licensing requirement, and MTN, which signed a new 12-year license in 2019, is doing this ahead of a June 2022 deadline.

Looking at the IPO prospectus, and extracts from an MTN executive briefing in Nairobi this week, some of the highlights of the offer are: 

  • About MTN Uganda: Founded in 1998, it is the largest of two telcos in the country with a 55% market share compared with 45%  for Airtel. It is the most admired brand in the country and part of the MTN Group that is in 27 African countries and one of the largest brands on the continent. MTN Uganda had 2020 revenue of  UGX 1.88 trillion (about $531 million) and a pre-tax profit of 460 billion ($130 million). It has 15.7 million phone subscribers, with 5.3 million active data users and 9.4 million mobile money users.
  • Uganda Market: In the densely-populated country of 44 million people, MTN sees much more growth from the young population, as the current mobile penetration of 67% is considered low for Africa. Also, wIth Africell having exited in October 2021 and  Smart Telecom about to follow suit, MTN’s market share could reach 60%.  
  • Offer: 4.47 billion ordinary shares, accounting for 20% of the company are on sale at UGX 200.00 ($0.057) per share. The minimum lot is 500 shares, so the investment required is UGX 100,000  ($28) per shareholder. 
  • Allocation: All East African community shareholders are being offered 5 incentive shares for every 100 they buy, but MTN customers who apply on the IPO platform and pay with MTN mobile money get another 5, for a total of 10 incentive shares. Ten (10) incentive shares for every 100 bought are also being offered to Uganda professional and East Africa professional investors who purchase shares worth over UGX 177 billion ($50 million). If oversubscribed, Uganda retail investors and MTN employees will be given priority and allocated up to UGX 5 million ($1,414), with others on a pro-rata basis, in the order of Uganda professional investors, then East African investors, and finally international other investors. MTN has received approval to market the shares to investors in Tanzania and Kenya, and they await clearance from other EAC countries. The offer may be suspended if it does not reach 25% uptake (about 1.12 billion shares)
  • USE: The MTN shares will be listed on the Uganda Securities Exchange. Currently, its largest counter is Stanbic Bank Uganda, that had its IPO in 2006, and accounts for about half the market activity, but MTN are expected to overtake them after listing their 22.39 billion shares in December.
  • IPO Applications: The process is fully electronic and starts by applying online to open a securities central depository (SCD) account. This can also be via USSD on an MTN line, or via the MTN app or at an authorized selling agent. In  Kenya,  investors can apply through a stockbroker like Dyer & Blair who will verify their ID and PIN details. The minimum to buy is Kshs 3,250 at Dyer & Blair, which is for 500 shares at Kshs 6.50 per share.
  • Shareholding changes: Ahead of the IPO, currently MTN Group owns 21.5 billion shares (96%) and the MTN Chairman, Charles Mbire, a Ugandan businessman who also chairs the USE, owns the other 4%. After the IPO, MTN will have 76% and new investors will have 20%, and MTN, Chairman Mbire, and the directors have committed not to sell any more shares for the next year. MTN Group will still exercise controller the composition of the board, and acquisition, financing, and branding decisions.
  • Taxes: MTN Uganda is the largest taxpayer in the country and they paid a disputed amount of transitional license fee totaliing UGX 50 billion ($14.1 million) ahead of the IPO.
  • Use of Funds and Debts The funds raised will go to reimburse MTN who have grown the business since inception by investing over one trillion shillings and who have also committed to investing another trillion over the next three years expanding the network, mainly in rural Uganda for other growth activities. MTN Uganda’s debt is UGX 194 billion (equivalent to about $55 million) and $45 million at June 2021. MTN Group has arranged a syndicated loan, through Stanbic South Africa, with local banks in Uganda – Stanbic, Absa Citi and Standard Chartered.
  • Fintech opportunities: The country was reported to have 31.3 mobile money accounts but after a cleanup exercise, the number of active subscribers was determined to be 20.3 million. MTN’s mobile money has 45,000 merchants customers signed on, it sees a great opportunity to grow that market that it predicts can be ten times larger. They will also roll out bank tech products – savings, loans and insurance – and compete with banks at the bottom of the pyramid.
  • Dividend: Payout was 57% of profits in 2018 and 2019.  
  • Threats: Price competition may affect average revenue per user and profit margins, and a weakness identified is the low income of consumers.
  • Timelines: The IPO runs for just over one month. It opened on October 11 and closes on November 22, with an announcement of the results on December 3 and listing on December 6. Refunds, if any, will be paid from December 3. 
  • Transaction advisors: SBG Securities Uganda is the transaction advisor and lead sponsoring broker. Receiving banks are Stanbic, Standard Chartered and Absa in Uganda. Selling agents are SBG Uganda, Dyer & Blair Uganda, Crested Capital and UAP Old Mutual. In Kenya, these are SBG Securities and Dyer and Blair.
  • Offer Costs: Budget is UGX 32.6 billion with MTN International expected to foot 22.3 billion and MTN Uganda the other 10.3 billion. The bulk of the payments are the placement fees (UGX 9.9 billion) and the transaction advisor (7.5 billion). Others are VAT on professional fees (3.6 billion), while the tax advisors in SA and Uganda will earn a total of 4.2 billion. There is also the reimbursement of selling agents of retail shares (4.2 billion) and the public relations bill to MTN Uganda is UGX 356 million.
  • Valuation:  With the shares offered at UGX 200, Dyer & Blair advise a “buy” with a target market price of UGX 218, a 9% upside from the current offer. And when incentive shares are factored in, this makes the value of the shares almost 15% higher than the IPO offer.
  • Verdict: The euphoria could be similar to the Safaricom IPO in Kenya, whose investors are also yearning for another large IPO.

Read more at the MTN Uganda IPO official website.

EDIT December 3, 2021: Offical MTN Uganda IPO results show a 64.8% subscription as 2.90 billion of the 4.4 billion shares were taken up by 21,394 investors. This includes sale shares and incentive shares.

The IPO grossed UGX 536 billion (approx $150 million) and all applicants will receive their full allocation, with the shares listed on the Uganda Securities Exchange from 6th December.

Shareholding announced with IPO results: MTN International (Mauritius) 18.594 billion shares (83.05%), National Social Security Fund (NSSF) Uganda 1.98 billion shares (8.84%), Charles Mbire 892.23 million shares (3.99%), NSSF – Sanlam (0.26%), Bank of Uganda defined benefits Scheme – Sanlam (0.19%), National Social Security Fund (Kenya) – Sanlam (0.18%), Duet Africa Opportunities Master Fund IC (0.13%), EFG Hermes Oman (0.12%), First Rand Bank (0.10%), and the Uganda Revenue Authority staff benefits scheme – Sanlam (0.08%). Other shareholders have 684.47 million shares (3.06%), for a total of 22.389 billion shares.

More here.

Reading the Tea Leaves at Safaricom

Safaricom have published their annual report (download here). In a cost-cutting measure they will not be printing or mailing out these reports to their 829,000 reporters, nor will they serve any refreshments or give gifts at their annual general meeting in August 2009.

image from sambazanow

A to Z excerpts from the report

Performance: Company had Revenue of 70.4 billion ($915 million) and a pre-tax profit of 15.3 billion ($198 million). Income was 59 billion from voice, 8 billion from data & SMS, but compared to 2008, growth is 8% and 80% respectively.


  • Earned almost 3 billion from the money transfer system.
  • Vodafone hopes to take their money transfer model to other countries, though it has not fared well in Tanzania. Safaricom also hope to extend into international transfers from the UK via Western Union: it’s in test now (and hopefully will be cheaper than the current WU rates from UK to Africa).
  • Also plan to extend it to bulk payments (e.g. low-end salaries in large organizations)
  • Agents now recruiting sub-agents.


  • In September 2008, CEO Michael Joseph (US citizen?) joined the board, while Information Permanent Secretary Bitange Ndemo left the board. Kenya Government still has the Treasury and Privatization heads on the board.
  • Susan Mudhune joined the board and was rumoured to be the next chairperson to replace (70+) Nicholas Nganga.
  • Both Michael Joseph and Les Baille have 2.35 million shares, the Chairman has 850,000, and privatization secretary Esther Koimett has 637,000.

Education: Working with JKUAT and Moi University on curriculum to get the graduates with the rights skills in telecommunications to join the company.

Investment: The company bought 51% of One Communication Ltd, a Wimax service provider. One owns Comtec training & management (has local loop license), Comtec Integration (has digital carrier network operation license), and Flexible Bandwidth Services (has ISP license). One was technically insolvent. It had net liabilities of -66 million, but Safaricom paid 186 million for a stake in it after estimating it had goodwill of 219 million.

Licenses: Safaricom has 5 licenses with a span of 15 years; international operator license (1999), international gateway (2006) and 3G (2007). Also acquired two more by buying into One Communications – local loop operator, and data carrier network operator.

Liquidity: Safaricom has trade payables of 11.9 billion, receivables of 4.3 billion, and cash of 4.3 billion. Their financial statements note that current liabilities (35.3 billion) exceed current assets (17.3 billion) by 18.2 billion ($236 million), but that the company generates sufficient cash (about 30 billion) to meet operations; also that a significant portion of creditors relate to network expansion costs and this is expected to continue in this period of intense network expansion and they will borrow if there is a shortfall. should the auditors have emphasized this?

Media Crunch?: Sales & advertising was 2.28 billon ($30 million), basically unchanged from the year before, and this was despite facing an expensive marketing campaigns from rival Zain


  • Pension giants – National Social Security Funds of Uganda (160 million shares) and Rwanda (96 million shares) are in the top 10 shareholders but Kenya’s NSSF is missing.
  • Has 465,000 shareholders who own less than 1,000 and while another 300,000 own less than 10,000 shares. The former will be getting dividend payments of 100 shillings ($1.30), which makes the toll-free payment dividend a very smart option to apply for.
  • No mention of Mobitelea in report which recently exited from the shareholder register.

Submarine/Fibre: Safaricom is a shareholder in Teams fibre optic cable system. It has committed 1.6 billion shillings ($21 million), which it estimates will reduce cost of communication by up (only) to 33% over 5 years.

Tax Break: Will pay 27% income tax for 3 years from March 2010, instead of 30% since they listed. Other Kenyan companies pay 30%.

IPO Hard Choices

It’s getting very hard to stick with my avowed IPO bypass plan with Safaricom. The market is so liquid now, and may dry up later, so why not take advantage of it now? Also, I read one I-bank analysis of IPO’s in the last few years, that shows that all (except Eveready) have significantly out-performed their IPO price, and Safaricom is not Eveready! Still, reading Maishinski comments here about paying a premium, and likely refunds, there’s still great upside for capital appreciation, in a company growing at 30% a year with a likely dividend of 0.15 this year.

just when I thought I was out, they pull me back in!
More IPO

  • Banks versus Brokers Dyer & Blair have set up an IPO center on Loita St. that is open 7 days a week (weekdays 7am to 7pm). Brokers have to fight tooth and nail with commercial banks to get their IPO commissions since the banks have a much larger branch presence to earn a 1% commission on each application. That’s why stockbrokers can be found in supermarkets, cybercafés and bank halls (the latest is Drummond and Suntra brokers at Consolidated Bank) selling IPO’s to earn their 1.5% commissions. You are sometimes scared of making contact with a sales agent when you walk past a bank tent or broker desk in a movie hallway with Safaricom brochures and forms waiting.
  • What’s worse than taking an IPO loan? Paying for shares using a Barclays card (or debit card)
  • Regional: the first confirmation of an over-subscription comes the East African with a report that NSSF Uganda will get 1/3 of the shares they applied for – or about $11 million worth (out of $34 million). [1.3% of the shares on offer].
  • CFC takes the IPO to Rwanda via Fina Bank.
  • International: Wambia Capital offers US institutional investors and high net-worth individuals a chance to invest in Safaricom service only applicable to sophisticated investors for secondary market issues.
  • Boardroom dealing: Former LSK Chairman Former LSK chair makes a damning accusation about Mobitelea and its cabinet allies.

NSSF: Apples & Oranges

Kenya’s National Social Security Fund finally released their year-end results in the newspapers today after many years of pressure from governance experts and regulators. The scheme hopes to convert into a pension fund and states that it plans to hold an AGM soon

While the statements show improved performance over the last four years (NSSF-K was abused in the 1990’s and forced into bad property investments and lost billions in collapsed banks), how does it compare with NSSF Uganda who released their results last week?

an approximate conversion to US$

NSSFK $434 million (35%)
NSSFU $76 million (13%)

Government Securities
NSSFK $115 million (9%)
NSSFU $289 million (51%)

NSSF Uganda lists their holdings – as Uganda Clays, Baroda, Nsimbe, DFCU, Stanbic, Serena, HFCU, Victoria properties. The Kenyan one does not list but the portfolio would include Unilever Tea, Nation media group, HFCK (11%) KCB (8%) British American Tobacco (20%) East African Breweries (8%), EAP cement (27%), and National Bank (48%)
NSSFK $618 million
NSSFU $54 million

Current assets
NSSFK $50 million
NSSFU $350 million

Current Liabilities
NSSFK $20 million
NSSFU $11 million

Members Funds
NSSFK $1,240 million
NSSFU $548 million

Totals assets
NSSFK $1,240 million
NSSFU $564 million

NSSFK $61 million
NSSFU $38 million
However, the Kenyan one include changes in the market value of shares in last year, adding another $80m to bring total income to $141m

NSSFK $41 million
NSSFU $7 million

Net Gain/Profit
NSSFK $147 million
NSSFU $31 million


  • Under its current format, the ultimate payout will be low from NSSF(K) and the benefits at retirement will not be enough to sustain a majority of retirees.
  • Comparison between Stanbic Kenya and Stanbic Uganda.