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The Nairobian

Vodacom Tanzania to shed off 25pc stake as listing deadline looms

Business

By Frankline Sunday | Dec 14, 2016

*A Vodacom shop. The telco is awaiting regulatory approval for an Initial Public Offering following a presidential decree for all telcos to offload 25 per cent of their shares before December 31.* (PHOTO: COURTESY)

Tanzania’s leading mobile service provider, Vodacom, has announced an Initial Public Offering (IPO) that will see the telco sell off 25 per cent of its shares.

The move comes following a deadline set by President John Magufuli to have telecommunication service providers in the country list 25 per cent of their shares on the Dar es Salam Securities Exchange by December 31.

Vodacom Tanzania is majority-owned by Vodafone UK - the parent company of Kenya’s leading communication service provider, Safaricom - and commands a 30 per cent stake in Tanzania’s 38 million mobile subscriber market.

“Vodacom Tanzania PLC in collaboration with its lead transaction advisor Orbit Securities Company Ltd wishes to inform the public that it is preparing to offer its shares for sale to the public,” said the firm a notice.

“In accordance with the laws of the United Republic of Tanzania, the shares to be offered and sold will constitute 25 per cent of all the company’s issued and paid ordinary shares outstanding after the listing.”

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In 2010, Tanzania passed the Electronic Postal and Communications Act, 2010 that among other things required telecommunication service providers to float their shares to the public through the local securities exchange in three years.

The implementation of the law has been delayed in the past few years until an intervention by President Magufuli earlier in the year that gave a new sense of urgency, with December 31 this year as the deadline.

Vodacom said in the notice its board of directors had approved the IPO, with the firm now awaiting regulatory approval.

The telco is now waiting for the approval of the Capital Markets and Securities Authority (CMSA), Tanzania’s capital markets regulator.

“The company submitted its application to the capital markets and securities authority on November 25, 2016 for approval to offer shares to the public and it is at an advanced stage of preparing for the process,” said Vodacom.

So far, only Vodacom has made the commitment to list its shares on the bourse before the deadline. The country’s other six mobile subscribers, including Tigo and Airtel, which hold second and third positions in market share respectively, are likely to miss the deadline, attracting punitive fines.

The Government has in recent years become more active in managing the telecom sector, including the crackdown on counterfeit smartphones, which accounted for up to 30 per cent of devices in circulation at the start of the campaign.

Early this year the telecom regulator’s board was also disbanded after it failed to update the Telecommunications Traffic Monitoring System (TTMS).