The second-largest cell phone company, Airtel Uganda, will be able to trade on the Uganda Securities Exchange on November 7. The IPO of the telecom company didn’t raise as much money as planned—slightly more than Sh211 billion ($1.4 billion). The goal was to raise Sh800 billion ($5.2 billion).
Airtel Uganda let the public buy 20% of its eight billion ordinary shares. It got 4,614 applications for just over 4.3 billion shares. A group called the National Social Security Fund (NSSF) put in an application for 10.55% of the company. Regular investors owned 0.34%. Telco is the 11th company to join the Uganda Securities Exchange, showing investors are interested in the company’s future.
The first sale started on August 30, 2023, with 100 sh shares and buying incentives. Details and results of the IPO will be made public. In 2021, NSSF bought 1.9 billion MTN IPO shares, which gave it 8.84% of the company. 65% of the MTN IPO shares were bought.
Read also: Airtel Uganda plans $216m Initial Public Offering
Airtel Uganda’s IPO and telecom market effects
The telecom market and investors are discussing Airtel Uganda’s IPO and upcoming listing on the Ugandan bourse. Going public has significant repercussions for the telco and the industry.
This IPO boosts telecom competition immediately. Airtel, the second-largest telecom operator in the country, gets listed on the stock market, increasing competition. Companies competing for market share and investor confidence will likely innovate and improve services.
This listing should boost the Uganda Securities Exchange’s market cap. The sh211 billion raised shows investor confidence in telecoms and the economy. As more telecom businesses go public or develop, investment opportunities and economic growth may increase.
A publicly listed corporation must be transparent and accountable. Airtel Uganda’s strict regulatory standards and public scrutiny can promote corporate governance and responsibility in the telecom business. This will improve the industry’s reputation and investor appeal.
Other firms may follow Airtel’s lead. The sector’s growth boosts the economy and improves communication access.
With its 10.55% holding in Airtel Uganda, the National Social Security Fund (NSSF) diversifies its investment portfolio. Diversifying the fund’s performance and financial stability may affect sectors other than telecommunications.
Rural area connectivity and telecom expansion
Rural areas have not had stable phone service for a long time. There aren’t many fast internet, cell phone, or data services in these places. This might change after Airtel Uganda’s IPO.
More connections in rural places significantly affect the people who live there. Access to communications services can give people in rural areas more power by giving them tools for getting an education, medical care, and making money. Farmers, for example, can get market information, weather forecasts, and banking services, all of which help farms be more productive.
Challenges Ahead
Connectivity in distant areas looks like it will work, but problems still exist. Putting in new infrastructure in remote areas can cost a lot, so ensuring that services last and are cheap is very important. Also, regulators need help to make it easier for telecom networks to reach areas that aren’t well served yet.