MTN Uganda is now second most valued company in East Africa

January 21, 2025 in Business, Companies, Investment, Markets, Trade & Industry by Editor

MTN Uganda Board Chairman Charles Mbire

Unrelenting investor demand for telecoms stock has provided a MTN Uganda a tailwind that sent the company’s value soaring 71pc on the Uganda Securities Exchange (USE); and positioning it as the second most valued company in East Africa. That was an improvement from fifth position where it was previously placed, beating regional lender Equity Bank, Tanzania Breweries and KCB Group among others.

MTN’s stock hit a peak on the USE January 14, with the Bloomberg Index indicating a closing price of UGX289.99 a share, which was 71pc above the average UGX170 six months ago. As a result, the company’s market value vaulted from $1.008 billion at the end of 2023, to $1.8 billion on January 14, settling at rank two among the most valued companies in the region after Safaricom, that was still ahead with a market valuation of $ 5.7 billion.

The bullish performance followed the conclusion of the company’s second share offer last June, which saw the stock oversubscribed 100 percent with applications for 3 billion shares against the 1.6 billion that were available. Analysts cite strong financial performance and regular dividend payouts as factors that have made the stock a must-buy ahead of the release of full-year results for 2024 in March.

Most of the demand is coming from institutional investors seeking a foothold in the regional telecoms market. MTN’s stock has seen steady gains since Q3, 2023, on the back of sub-optimal performance by Safaricom’s Ethiopian subsidiary.

According to SBG Securities Uganda Chief Executive officer Grace Semakula the MTN stock has generated “a lot of institutional demand,” since the conclusion of secondary share offer last June.

“The offer was oversubscribed and we see continuing demand from investors seeking a position in the telecom sector. Additionally, MTN’s results have been positive, payment of dividends has been regular supporting investors cashflows thus making the stock a compelling proposition.”

MTN’s performance is further underpinned by Uganda’s consistently liberal foreign exchange policy stance, which assures investors of easy repatriation of profits.

MTN Uganda has been the most traded stock on the Uganda Securities Exchange over the three months to January 13, 2025, netting sales of 62.4 million shares valued at UGX 14 billion over the period – representing an average of 990,705 shares per trading session. The stock’s volume peaked on November 7, 2024, when 39.4 million shares were sold in a single day.

MTN which will announce its 2024 financials in March, first went to the market in December 2021, with an IPO for 20 percent of its stock. The IPO sold short by 7.03 percent, prompting a return to the market last May. The secondary offer, concluded between May 27 and June 10, 2024, was oversubscribed with applications for 3 billion shares against the 1.6 billion that were available.

The company which had 20.7 million subscribers at the end of June 2024, announced a profit after tax of UGX 295.7 billion, half of which was paid out in an interim dividend of UGX6.6 per share. The Q3 earnings call announced subscribes at 21.6 million and UGX 459.4 billion in profit after tax, earning shareholders a second interim dividend of UGX7.5.

The biggest winners have been the company’s largest indigenous stockholders, NSSF Uganda and MTN Uganda Board Chair Charles Mbire, whose portfolios gained $85.7m and $29.2m respectively during the reference period.