Good idea but needs to be cautiously handled
Kampala, Uganda | JULIUS BUSINGE | Uganda’s plan to have telecom companies list on the stock market is a goodstep towards inclusive growth but should be handled cautiously to avoid discouraging investments.
Financial and economic experts who spoke to The Independent said directing telecoms to list on the Uganda Securities Exchange (USE) will create sense of ownership while at the same time promote transparency as a result of the mandatory disclosures to the stakeholders – customers, analysts, government and shareholders.
Enock Nyorekwa Twinoburyo, an economist familiar with the industry says the return on investments in the telecom industry significantly went up in the past nine years since the launch of mobile money in 2009.
Because of this, he says there is need for Ugandans to have a pie in this fast growing and profitable industry.
He, however, says government needs to be cautious in handling the matter so as not to createan economic situation that would discourage normal flow of foreign direct investments.
Ibra Kasirye, a senior research fellow at the Makerere University-based Economic Policy Research Centre (EPRC) said the government’s latest move was long overdue and that it was a right step towards developing the stock market.
He says it is an opportunity for people who have been investing in traditional areas such as land and livestock to also venture into stock market and earn dividends from profitable entities.
He said that stock markets like the Nairobi Stock Exchange are busy because authorities there have encouraged segmented income earners from different sectors like teachers [in the education sector] to invest in stocks.
“It is (also) about discloser aspect…possibly government wants to know more about MTN,” he said.
Frank Tumwebaze, the minister of Information, Communication and Technology (ICT) said on Sept. 19 that cabinet had approved a new National Broadband Policy, which among others, required telecom operators to list shares on the stock market.
He said local listing for all telecom operators as a licencing condition will help mitigate capital flight. All the big telecom operators in the country are foreign owned.
“Every operator that seeks a national operator licence must be able to cover the entire geographical place of Uganda so as to enable universal access, promote effective competition and quality of service,” he said.
But the operators said they are yet to receive official communication regarding mandatory share listing.
“It is something we have heard but have not officially been told to us,” said MTN Uganda Communications Manager, Val Okecho, said.
In case the government communicates to them, then, they will share their views with different stakeholders and consider the matter appropriately and in accordance with the laws governing the entire process, he added.
“We have not received an official communication as yet. We shall discuss it upon the official communication,” said Airtel’s Public Relations Manager, Sumin Namaganda.
Currently, MTN and Airtel controlapproximately 95% of Uganda’s telecommunication industry market share with a combined total of around 21 million voice subscribers out of about 23million – in a market that has four other small players.
Last year, MTN Uganda recorded a 10.7% growth in revenue to Shs 1.68 trillion compared with Shs1.5trilion in 2016 supported by growth in demand for data and digital services. On the other hand, Airtel – trading as Bharti Airtel Limited, operating in 20 countries across South Asia and Africa, recorded a 53% growth in net profit in Uganda to Shs245bn.
In a telephone interview with The Independent on Sept.28, Finance Planning and Economic Development Minister, Matia Kasaija insisted that cabinet will not rethink this decision thatwas made public a few weeks ago.
Kasaija revealed that he was among those who attended the cabinet meeting that resolved that telecom companies must list on the stock exchange.
Kasaija also said that there are also plans to have formerly government owned companies to list on the USE so that the locals can benefit from their profitable ventures.
Some of the companies that were supposed to list include the struggling Uganda telecom ltd, which was supposed to have floated 49% of its shares, Kakira Sugar Ltd not less than 10% shares, Kinyara Sugar 19% shares, Tororo Cement Works (20%) Barclays Bank (25%), Apollo Hotel currently trading as Sheraton Kampala Hotel would list not less than 20% shares.
Others that were supposed to list includes;Lake Victoria Hotel which was supposed to have offloaded at least 10% of its shareholdings and Uganda Grain Milling Company that was supposed to float nearly 30% stake held by the government.