Crush MTN Uganda IPO intrigue with facts…

On October 5, 2021, MTN Uganda announced its clear intention to float 20% of its shares on the Uganda Security Exchange market for public investors across the East African Community.

The IPO values the company at UGX 4.5 trillion ($1.2 billlion), and it’s expected to double the value of the Uganda Securities Exchange. 

MTN Uganda becomes the fourth telco in the region after Safaricom, Vodacom Tanzania and MTN Rwanda to list its shares. 

MTN Uganda started in 1998 and has grown to become the largest Telco in the country with over 14 million subscribers and counting with a commanding 59 per cent market share. 

This IPO has been driven mainly by regulatory changes rather than business impetus but it will give the East African public a chance to invest in one of the dominant companies in the Ugandan economy, and in a sector that is still growing.

Since this IPO was announced, there has been some intrigue and misinformation spread by numerous parties intentionally and un-intentionally. The best way to counter this is to provide the facts and help investors decide if their hard earned money will have a safe and profitable home in MTN Uganda.

The MoneyInAfrica team does by posing questions about MTN Uganda that will give you the facts about it's operational and financial fundamentals, and also a quick FAQs of the IPO process.

1. What is the business model of MTN Uganda?

MTN Uganda is a telecommunications company, it is in the name "Mobile Telecommunications Network" (MTN) Uganda. 

MTN Uganda has been in Uganda since 1998, and over that time it has focussed on three key areas:

  • Voice/SMS
  • Data
  • Fintech / Digital e.g. Mobile Money (MoMo), payments solutions (MoPay and MoKash)
MTN Uganda still remains mainly a standard telco deriving the majority of its revenue from Voice & SMS. 

Data and Fintech/Mobile money services are growing fast with forecasts that they will exceed Voice & SMS in a few years. This would give MTN more resilient revenues and larger profits.

At the moment mobile penetration in Uganda is only 68% with MTN having the largest network, there is space for growth but it is the harder one to attain especially in more rural areas. 

MTN Uganda Revenue Split

Source: MTN Uganda

Voice & SMS still make up half of revenues.

Data is the fastest growing sector at 32.2% year on year.

Data and Fintech/Mobile Money should overtake Voice/SMS in a few years

2. Who runs MTN Uganda?

Once you invest your money in MTN Uganda, the Board of Directors and senior management  will be the people in charge of ensuring that your investment is fruitful.

The Board of Directors and Senior Management make the decisions that shape the future of the company and therefore your investment. 

The Board is led by largest individual shareholder, Ugandan businessman Charles Mbire. As would be expected for a South African firm, half of the board is from there. The Board is quite new with only the CEO and Chairman having served over 3 years.

The CEO is a Belgian nuclear physicist who previously led MTN Ivory Coast. He leads a diverse team with a large number of local executive talent and foreign hires.

MTN Board of Directors

Source: MTN Uganda

New and diverse board led by largest individual shareholder

3. Who owns MTN Uganda?

When you buy shares, you will become a one of the company's shareholders. As a shareholder you have a right to make decisions about the company including who sits on the Board of Directors. 

The actions of shareholders are the reason why share prices go up and down, irrespective of how the business performs therefore knowing them is key.

MTN Uganda is issuing 20% of shares to the public but MTN Group will ultimately remain the majority shareholder. 

The second largest shareholder will most likely remain chairman, Charles Mbire.

Before IPO

MTN Shareholding before IPO

Source: MTN Uganda

After IPO

MTN Shareholding post IPO

Source: MoneyInAfrica.com

MTN Group (yellow) will still remain largest and majority shareholder .

4. How much money does MTN Uganda make?

Investing is usually done to make money, and only companies that themselves make money can make you money. 

Sales/Revenues: In 2020, MTN made USD $508m which accounts for the 1.3% of Uganda's GDP. Revenues have grown at a paltry 5.86% which is not outstanding but at the same pace as the wider economy.

Profits: In 2020, MTN Uganda generated profits of US $87.09m; and has been profitable over the last five years with profits rising faster than revenues at an average of 25.32% year on year. 

Profit Margins: MTN Uganda has become a more profitable company over the last 5 years with margins doubling to 17%. This has been driven by move to better margin products like Data and Mobile Money

MTN Uganda Revenues

MTN Revenues 2016 - 2020

source: MoneyInAfrica.com

Revenues/Sales compared to Peers (2020/2021)

MTN Revenues compared to peers

Source: moneyinafrica.com

MTN Group has strong revenues but regionally is dwarfed by Kenyan behemoth, Safaricom with 5 times the revenue in an economy less than 3 times the size

MTN Uganda Profits 2016-2020

source: MoneyInAfrica.com

MTN Uganda profits have almost tripled in the last 5 years to $87.1m, growing much faster than sales/revenue

MTN Profit Margins

MTN Profit Margins 2016-2020

source: MoneyInAfrica.com

Profit Margins in comparison to Peers

East African Telco Profit marginssource: MoneyInAfrica.com

MTN Uganda profit margins have doubled in the last 5 years to 17%.

They still have a way to grow to reach regional giant Safaricom at 26% but outpace other regional peers

5. Will MTN Uganda make me money?

The assumption is that you would make an investment in MTN Uganda for profit.

The best measures we use to see if a company has a track record of making money is looking at the movement in share price (for capital gains) and dividends (for income).

Due to this being a newly listed company there is no share price but we can look at Return on Equity (ROE), which you can use to compare to other investments ROI, and we can look at dividend payout to existing shareholders. 

Return on Equity: ROE shows how much profit is made for every shilling invested by the shareholder. Over the last 4 years, ROE has been over 40%, this is a lot better than returns on bonds (10-15%). Only a part of this profit will be returned as dividends, the rest will be reinvested to increase shareholder value in the business. This ROE is similar to regional peers except Vodacom Tanzania which is struggling to maintain profitability

Dividends: The best way for a investor to get cash in their pocket is through dividends. MTN Uganda has paid out about 40%-60% of profits as dividends - which is the lowest among regional peers. Despite this low payout ratio, the dividend yield (dividends per share) as of last week remains competitive among listed regional peers excluding the unique case of Vodacom Tanzania that is undergoing a "shakedown" by the authorities.

MTN Return on Equity

MTN Return on Equity

source: MoneyInAfrica.com

Return on Equity in comparison to Peers

MTN Return on Equity compared to Peerssource: MoneyInAfrica.com

MTN Uganda ROE has comfortably remained above 40%, over 4 times yield on T-Bills (9.55%). 

This ROE is similar to listed peers in the region.

Dividend Payout compared to peers

MTN Dividend Payout ratio compared with listed Peerssource: MoneyInAfrica.com


Dividend Yield compared to peers

MTN Uganda Dividend Yield compared to peers

MTN Uganda pays out less of its profits as dividends compared to its regional listed peers.

At the IPO share price, the dividend yield remains in line with regional listed peers.

6. Is MTN Uganda financially stable?

The two things that can bring any company to its knees however good its business or products - is too much debt or lack of cash. 

Debt: Debt levels for MTN Uganda have fallen over the last five years but they remain just under 3 times shareholder value. In the region, among listed peers, only MTN Rwanda is more indebted with debt almost 5 times shareholder value.

Cashflow: MTN Uganda has continuously been able to generate more cash through its operations than reported profits except in 2016. This is a positive sign that the company is generating more cash year on year.

Debt Levels compared to peers

Debt/Equity ratio among list East African telcossource: MoneyInAfrica.com


Cash Generation 2016 - 2020

MTN Operating Cashflows

MTN Uganda is one of the more indebted telcos in the region.

MTN continues to generate more cash than profits year on year.

7. Is MTN Uganda management team increasing the company's value?

The responsibility of the management team is to  "sweat" the assets of the business - make as much profit using the assets available, and sustainably increase the value of your stake in the company.

Return on Assets: This is a good measure of how well the management is "sweating" the assets. In 2020, 1/- of profit was produced for every 8/- of assets - rate of 11.65%. Regionally this rate is only exceeded by Kenyan giant Safaricom with 29.78%

Book Value: This is the difference between the assets of the company and its debt/liabilities- the bigger this the more valuable the company is on book. 

Return on Assets

MTN Return on Assetssource: MoneyInAfrica.com


Return on Assets compared to Peers

MTN Return on Assets compared to peers


MTN Book Value

MTN Book Value

source: MoneyInAfrica.com

MTN Uganda is one of the regional leaders in sweating its assets (ROA).

MTN management has continuously increased the value of the company, more than doubling it over the last 5 years

Bonus: What is the value of  MTN Uganda?

MTN Uganda is valuing its shares at UGX 200 but what is their "true" value? Like most things, it depends on who you ask;

Investment Bankers: They would value the share at UGX 294 with a range of 235 - 310. This price they would expect another company to pay if they wanted to buy up the entire MTN Uganda. 

Value Investors: They would value the share at UGX 281 with a range of 224 -295. This price is based on the predicted cashflows of the business, and uses a similar model to the one recommended by Warren Buffett.

Similar Companies: This would value the share at UGX 230 with a range of 184 -242.This price is based on how much investors are paying for other similar companies in the region.

Accountants: They would value the share at UGX 32 which is the book value. This is a very conservative valuation because it does not consider the value of the brand, IP and technology.

Impact of different valuations

MTN Uganda - Different Valuationssource: MoneyInAfrica.com

Investment Bankers valuation: UGX 294

Value Investors valuation: UGX 281

Similar Companies Valuation: UGX 230

Accountants: UGX 32

IPO Share Price: UGX 200

Has MTN left some money on the table for investors?...

Quick Facts about IPO process

Why is MTN doing an IPO?

The reasons given by MTN Group’s to undertake an Initial Public Offering of 20% of MTN Uganda shares to the public are;

  • More Ugandan shareholders: To broaden Ugandan shareholding in MTN and provide an opportunity to Ugandan investors, including MTN’s loyal customers, to own a stake in the Company and participate in its future growth.
  • Regulatory Commitment: Comply with NTO (National Telecom Operator) licence and UCC Regulations 2020 that mandated it to list before  30 June 2022.
  • Financial Inclusion: Contribute to expansion of Uganda's capital markets.

What is the IPO Share Price?

Each share is being offered at UGX 200.

How many shares are available in the IPO?

4,477,808,848 shares held in MTN by MTN International (subsidiary of MTN Group South Africa). 

Total value of IPO is 895.6bn (251m USD)

MTN is also offering incentive/bonus shares based on following formula

MTN IPO Allocation of Incentive Shares

When does the IPO start?

The application period for shares started on Monday 11th October 2021 at 10:00am (East African Time).

When does the IPO end?

The application period for shares ends on Monday 22nd November 2021 at 4.00pm (East African Time).

Preferably apply earlier than that so you don't miss your chance if you intend buy.

How do I apply for IPO shares?

Ways to apply for MTN Uganda shares

  1. 1
    MTN m-IPO platform: Available to MTN Uganda Customers who have a SCD account. Applications done by text or my-MTN app, and funds taken from Mobile Money. Fastest method.
  2. 2
    Uganda Securities Exchange Easy-Portal platform: Applications can be done on the USE online platform but will need to have Broker details. Faster method because all online but still need to open SCD account with Broker.
  3. 3
    Brokers: This requires getting in touch with Brokers/Authorised Selling Agents to open accounts and submit application forms. For new accounts will need to provide ID e.g. passport/ national ID details. This is the slowest method because it requires the most forms but gives the most flexibility especially in means of payment.

The Authorised Brokers/ Selling Agents

When will I know if I got allocated IPO shares?

Allocation decisions will be announced on Friday 3rd December at 4.00pm (East African Time).

For those unlucky enough to not have been allocated all the shares they applied for will be refunded.

When can I start trading my shares on the Stock Exchange?

The shares will be listed on the Uganda Securities Exchange on Monday 6th December 2021 at 9.30am (East African Time), and can be traded.

What are my chances of being allocated shares?

All shares are the same price and MTN aim to allocate to all that apply but if there is an over-subscription, shares will be allocated in the following priority;

  1. 1
    Ugandan Retail Investors bidding for less than UGX 5m worth of shares
  2. 2
    Other Ugandan Retail Investors and Eligible MTN Employees
  3. 3
    Ugandan Professional Investors
  4. 4
    East Africa Community Investors
  5. 5
    Non East African Community Investors

Do you want more detailed analysis on MTN Uganda?

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About Andrew Kwabena

The Editor of MoneyInAfrica

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