Vodacom shares heavy to carry

Vodacom Tanzania CEO Ian Ferrao

By Mnaku Mbani

Tanzania capital market is expected pass through major litmus test early next year, after Vocacom Tanzania announced a plan to float the Initial Public Offering (IPO).The leading mobile telecom company announced recently that it is planning to float 25 per cent of its shares to Tanzanian public, in the line with the country’s regulatory requirements.

The new regulation requires mobile telecommunication companies to list their shares at the Dar es Salaam Stock exchange, as a move to empowering Tanzanians to own their economy.

The company recently announced the change its name from Vodacom Tanzania to Vodacom Tanzania Limited Plc, as a preliminary procedure to go public.

Reports have said that the company has already made an application to the Capital Markets and Securities Regulatory Authority (CMSA) as the IPO float is scheduled in February and March next year.

Earlier reports have said that floating 25 per cent of its shares, will enable the company to collect Tsh500 billion, the largest IPO in the history of the Dar es Salaam Stock Exchange.

Investment advisors at the Dar es Salaam Stock Exchange (DSE) have said that the Vodacom Tanzania Ltd Plc shares float is huge and they are worrying on shortages of liquidity among local investors. The telecom company IPO will help to increase products in the market.

The DSE market has low number of products of which investors say does not give them wide choices to invest their money.

“The issue here is on how Tanzanians are going to exploit this important investment opportunity,” says one of the stock brokers.

“Without the help of foreign investors, I bet this IPO will be a big test for the market because it is the first largest float since the history of the market.”

He said the main challenge is on how Tanzanians are going to absorb this opportunity but when you talk about the East African market, this IPO will be grabbed massively.

He said the Tsh500 billion ($250 million) will be difficult to be subscribed by the local market, especially in July when many investors are facing various financial obligations.

However, he noted that the purpose of floating the Vodacom Tanzania Ltd Plc shares was a good decision and is aimed at empowering Tanzanians to own the economy.

He warned that if many foreign investors will buy shares during the initial stage, they might resale them during listing and all money will be taken away of the country.

Vodacom managing director Ian ferrao said they have submitted a draft prospectus to the CMSA ahead of its envisaged listing at the stock market.

Vodacom has submitted a prospectus to the Capital Markets and Securities Authority (CMSA) ahead of its envisaged listing at the Dar es Salaam Stock Exchange (DSE) as the telecommunications firm seeks to abide by the Electronic Postal and Communications Act, 2010.

“We have pleased to announce that we have filed our application and draft prospectus for consideration by the CMSA. This document sets out our proposal on the structure and timetable for the listing,” he said.

The CMSA has confirmed the receiving of the draft saying will be analyzed to see whether it meets legal requirements.

George Fumbuka, chief executive officer of Core Securities Limited says the value of DSE would sour after listing of the telecom companies. After Vodacom, Tigo has also announced an intention to float shares early next year.

Minister for Finance and Economy Dr Phillip Mpango said during the presentation of the 2016/17 Finance Bill that the existing mobile phones will be required by law to list their shares at the stock market within six months from July 1, 2016.

The country's eight operators are required by law to have 25 percent local ownership by Dec. 31.

Some of the giant mobile telecommunication companies include Vodafone subsidiary Vodacom, Millicom subsidiary Tigo, Halotel, and a local unit of India's Bharti Airtel.

Industry sources said Tanzania’s mobile phone companies would probably complete the listing process in the first quarter of 2017.
It was not clear if they would be fined or have their network operating licences suspended if they missed the mandatory listing deadline.
The government hopes the move will bring more transparency and offer the public a share in the industry’s profits.
Telecom is one of the fastest-growing sectors in Tanzania’s economy. But analysts say rushing through public offerings could lead to unsold shares, given that only Tanzanians are allowed to buy them.

End