Why MTN IPO Is Worth Betting On

By Juma / Published November 17, 2021 | 1:10 pm

KEY POINTS

MTNU’s market share is expected to reach 60.0 percent (from 50.0 percent in FY20), largely benefitting from the exits of two competitors (Smart Telecom & Africell).

The Capital Markets Authority (CMA) of Kenya approved the MTN Uganda IPO to be marketed to Kenyan investors, officially setting the ground for investors for Kenyans to buy into Uganda’s largest telco.

According to MTN Uganda, the IPO offers for sale 4.4 billion ordinary shares, accounting for a 20 percent stake of the Ugandan-based company, at a price of UGX 200.00 (approximately 6.50 shillings) per share.

Each prospective shareholder must apply for at least 500 shares, which, if fully allocated, results in a minimum investment of UGX 100,000 per shareholder. This is the minimum number of shares that one is allowed to purchase.

To be eligible, Kenyan investors will require a valid identification national ID or passport to open a Securities Central Depository (SCD) account at the Uganda Securities Exchange (USE) to apply for the MTN Uganda IPO.

Why is this IPO worth betting on?

According to Dyer and Blair, in FY21, they are expecting MTNU’s market share to reach 60.0 percent (from 50.0 percent in FY20), largely benefitting from the exits of two competitors (Smart Telecom & Africell).

“By FY23, we estimate TNU’s market share at 62.0%. The evolution in MTNU’s market share is expected to result in a 3 year – CAGR of 12.1% in MTNU’s active mobile phone subscribers to reach 20.0 million in FY23,” said experts from Dyer and Blair.

Analysts say they see the contribution of voice revenues to total revenues easing gradually from 51.7% in FY20 to reach 46.0% in FY23. They also envision the declining bias adopted by the voice ARPU to persist, easing by a CAGR of 7.2% to UGX 4,826 in FY23.

“Over our forecast period (FY21 – FY23), we estimate data revenues to advance by a CAGR of 11.0% to UGX 462.5 Bn in FY23. We expect data active subscribers to grow by a CAGR of 21.6% between FY20 to FY23, supported in part by MTNU’s device financing partnerships aimed at increasing the affordability of smartphones,” said Dyer and Blair.

Analysts also expect fintech & digital revenues to drive revenue growth over our forecast period. The fintech and digital revenues are expected to grow by a CAGR of 13.3 percent between FY20 and FY23, rising to UGX 701.3 Bn in FY23 as we expect increasing product innovations around MoMo to improve the number of transactions per subscriber.

MTN Uganda has 15 million subscribers, also offers mobile money financial services. The money financial services are the company’s biggest growth area as more people continue to seek cashless transactions amid the COVID-19 pandemic.

The firm largely competes with a unit of India’s Bharti Airtel. But it is projected that MTN Uganda could build more subscribers after another rival, Africell, said it was quitting the market.

About Juma

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it.(020) 528 0222 or Email: info@sokodirectory.com

View other posts by Juma