Tigo finalises plans for multi-billion IPO

28Nov 2018
Financial Times
Tigo finalises plans for multi-billion IPO
  • The minimum percentage shareholding that telecom firms are required by law to float on the DSE

TIGO Tanzania, the country's second-biggest mobile network operator, is close to launching its much-awaited initial public offering (IPO) at the Dar es Salaam Stock Exchange (DSE), a move expected to boost the market capitalisation of the local bourse.

Tigo has announced that it has already completed its legal conversion from a private limited company to a public limited company known as MIC Tanzania PLC, ahead of the IPO expected in the coming weeks and months.

"This is an important milestone in Tigo’s progress towards an initial public offering (IPO) in accordance with the Electronic and Postal Communications Act of 2010 (EPOCA)," Tigo said in a public notice on Monday this year.

EPOCA requires telecommunications companies in Tanzania to offer a minimum of 25 per cent of their shares to the public through an IPO.

Tigo is set to become the second telecoms firm to list on the DSE in line with the government's mandatory listing rules.

Vodacom Tanzania, the biggest mobile network operator in the country, became the first telecoms firm to list on the DSE in August, with its IPO fully subscribed.

Vodacom raised 476 billion/- in the IPO, which has been dubbed Tanzania’s biggest ever stock market listing.

Although it could not be immediately established how much Tigo Tanzania was looking to raise in the sale of its 25 per cent stake, industry players told the Financial Times that the IPO is expected to be a multibillion-shilling blockbuster.

The chief executive officer of DSE, Moremi Marwa, welcomed Tigo's upcoming IPO after the company cleared a protracted legal wrangle of its ownership structure that previously impeded it from becoming a public listed company.

“It is good that Tigo is finally fulfilling requirements of the EPOCA law. The DSE already has in place the infrastructure for automated share trade system as well as a central depository system to support Tigo's IPO ambitions," Marwa told the Financial Times.

“At this moment, I can't say what the investor appetite for Tigo shares will be like. It will depend on a number of factors ... For instance, we don’t know the size of the IPO or its pricing."

On his part, the chief executive officer of Core Securities, George Fumbuka, said investor appetite for shares was robust, but uptake would depend on the pricing of the Tigo IPO.

“Will it be at the retail market or are they going to take the fund managers approach? In the case of a retail market, we might encounter some problems if we depend on individual investors. For the second option there will be no problem because there are wealthy people or companies ready to buy the shares," he said.

Charles Shirima, public relations manager of the Capital Markets and Securities Authority (CMSA), told the Financial Times that the regulator was in final stages of processing a prospectus filed by Tigo for the IPO.

“I can't tell you the exact date when the Tigo IPO will take place because we are not done with processing the necessary documents,” he said.

Shirima noted that almost all mobile phone companies have already submitted their respective IPO applications at CMSA.

“We are now processing all the applications,” he said.

According to section 26(3) of the EPOCA legislation, all mobile telephone operators are supposed to list their shares at DSE.

The section states: "Existing licensees of network facilities, network services, application services or content services shall ... be required to offer shares to the public and subsequently list with the stock exchange.”

Though the law became applicable in 2010 it took longer-than-expected for the necessary regulations to be drafted.

Other major mobile phone operators in Tanzania include Airtel Tanzania, Halotel Tanzania and Zantel.

Like elsewhere in Africa, mobile phone use has surged in Tanzania over the past decade, driven by the launch of cheaper smartphones and data services.

Tanzania, east Africa’s third-biggest economy, had around 42 million mobile phone subscribers by June this year.

Azam Telecom (Tanzania) Limited was licensed by the Tanzania Communications Regulatory Authority (TCRA) earlier this year and subsequently acquired spectrum in the 700 MHz band at an auction to provide mobile network services.