National Social Security Fund’s strategic investment in Airtel Uganda’s IPO signals confidence in telecom sector

The recent announcement of the National Social Security Fund (NSSF) Uganda’s application for an investment of UGX 199 billion in Airtel Uganda’s Initial Public Offering (IPO) has garnered attention and underscores the positive prospects for this strategic move.

Amid reports questioning the exclusion of Airtel Money from the IPO, NSSF’s decision to invest is a testament to its confidence in the telecommunications sector, the company’s growth potential, and the caliber of its management team.

This investment by NSSF offers an exciting opportunity for millions of its members to become partial owners of a thriving company operating in a rapidly expanding sector known for pioneering and innovative services. As the largest indigenous investor in Uganda, NSSF’s involvement ensures that countless Ugandans become integral stakeholders in Airtel Uganda’s exciting journey ahead.

Airtel Uganda’s commitment to selling up to 20% of the company through the IPO, followed by a listing on the Uganda Securities Exchange (USE), aligns with the broader vision of both NSSF and Airtel Uganda. This vision is centered around nurturing the development of the Ugandan Capital Markets and fostering widespread equity ownership, allowing investors to actively participate in the nation’s growth and progress.

This landmark deal can be attributed to the result of careful negotiations, as NSSF acquired each share at the reduced rate of 47 shillings, significantly lower than the previously published 100 shillings per share.

Industry analysts have indicated that with the new NSSF purchase price of UGX 47 per share, the total outstanding Airtel Uganda shares would amount to 40 billion. Consequently, this pricing structure positions Airtel Uganda’s valuation at USD 508 million, marking a significant milestone in Uganda’s telecom sector and offering a substantial investment opportunity for NSSF and its members. This valuation stands at half of MTN’s USD 1.2 billion, illustrating the positive growth potential and investment attractiveness of Airtel Uganda.

MTN Uganda, the largest telecom with a subscriber base of more than 10 million people as of 2019, listed 22.4 billion ordinary shares on the Uganda Security Exchange (USE) in December 2021, reducing the ownership of MTN Group in MTN Uganda from 96% to 83.05%.

Describing the listing, then MTN Uganda CEO Wim Vanhelleputte, said the listing was a climax of the journey that MTN started in September 2018. He also highlighted that 65% of MTN Uganda’s employees have bought shares in MTN which is an indicator that the employees believe in the future of the company.

Out of the 4.4 billion shares that were offered, 2.9 billion were  allocated with 222 million of these being bonus shares. This unique transaction received 21,394 applicants, with 20,894 of these being Ugandans.

MTN’s listing on the Uganda Securities Exchange was noted to be the largest IPO in the history of Uganda.

The government welcomed the listing noting that it is a big deal for the Government and people of Uganda, as they now have a stake in one of the notable growth sectors in the country.

In January 2019, President Yoweri Museveni compelled MTN Uganda to sell shares on the local stock exchange to facilitate domestic ownership of the company and ensure more of the money it earns stays in the country.

Museveni accused telecoms companies of dodging taxes by under-declaring the volume of calls and that his government had bought machines that helped detect such activity.

Museveni also said telecommunication firms in Africa, which are often foreign owned, repatriate profits back home to the detriment of local economies.