Vodacom sees profit soaring by 100pc after sale of shares

KEY BENEFICIARIES IN VODACOM’S LISTING PROCESS

Dar es Salaam. Vodacom Tanzania Public Limited Company is promising its prospective investors that the company’s profits will more than double during its first year of trading at the Dar es Salaam Stock Exchange (DSE).

The telecom company is selling 560 million shares worth Sh476 billion through an initial public offering (IPO) to comply with the Electronic and Postal Communications Act of 2010 which requires telecommunications firms to offload 25 per cent of their stake to the public.

The share price will be Sh850. One can buy a minimum of 100 shares. Vodacom will hold its news conference today on the IPO. Stockbrokers say it’s a big thing which is making them busy even before the beginning of sale of shares.

“We have a tough job this time. I’m receiving many calls and texts from prospective investors seeking information about the IPO. It’s a hot topic in town,” said Zan Securities  chief executive officer  Raphael Masumbuko. “I’m also facilitating training to officials of a bank from Zanzibar which also wants to participate fully as an agent in the Isles.”

The IPO runs from March 9 to April 19, 2017 following an approval by the Capital Markets and Securities Regulatory Authority. Tanzania is said to have 89 telecommunications firms which are supposed to list on the DSE but so far only four — Vodacom, Airtel, Tigo and Maxcom — have submitted their applications even as the deadline expired at the end of last year.  Vodacom states in the prospectus that it projects to increase its profits after tax from Sh47.28 billion in the year ending March 31, 2017 to Sh95.87 billion, a 102.8 per cent increase, in the year ending March 31, 2018. The financial statements indicate that the firm’s profits were Sh128.2 billion in 2014, Sh32.05 billion in 2015 and Sh29.1 billion in 2016. The IPO is the biggest ever since the start of the operations of the capital markets in Tanzania in 1998.

Vodacom is Tanzania’s market leader controlling 31 per cent share of the mobile subscription by December 2016, according to Tanzania Communications Regulatory Authority.

It is followed by Tigo with the market share of 29 per cent, Airtel (26), Halotel (8), Smart (2) and TTCL (1).

“Tanzanians have been long ing for telecommunications companies to go public and this is the first one. The market is ready for it,” said Orbit Securities Ltd general manager  Juventus Simon.

“A countrywide awareness campaign is also needed to empower Tanzanians with this kind of knowledge.”

Before the IPO, Vodacom Group of South Africa owned 65 per cent of Vodacom Tanzania directly and a further 17.15 per cent indirectly through its holding in Mirambo Limited.

After the listing, Vodacom Group will now own 48.75 per cent and 26.25 per cent is owned by Mirambo Limited while the remaining 25 per cent goes to the public.

“There are existing arrangements between Vodacom Group, Mirambo Limited and the other indirect shareholders of Mirambo which relate, amongst other things, to the operation of Mirambo and the exercise of the voting rights held by Mirambo in Vodacom Tanzania. Under these arrangements, the direct and indirect shareholders of Mirambo have agreed that 49 per cent of the shares held by Mirambo in Vodacom Tanzania shall be voted in accordance with the instructions of Vodacom Group,” the prospectus states.

“Vodacom Group is desirous, after the listing of Vodacom Tanzania’s ordinary shares on the DSE and subject to the provisions of the Capital Markets and Securities Act, of increasing its direct shareholding in Vodacom Tanzania. Vodacom Group has held exploratory discussions with Mirambo in this regard. As at the date of this Prospectus, no agreement has been reached,” it adds.