MTN Uganda is set to offer the remaining 7 per cent of its shares on the secondary market, which were not sold during the initial public offering (IPO) in 2021.
These shares will be available at a market price of UGX 170 each, with a minimum purchase requirement of 1,400 shares, amounting to approximately UGX 238,000. It is important to note that the sale period extends from May 27, 2024, to June 10, 2024.
In a manner similar to many IPOs or share offers, MTN Uganda is providing an incentive: for every 140 shares purchased, investors will receive an additional 30 shares at no cost.
This means that an investment of the minimum 1,400 shares would yield 300 bonus shares, effectively reducing the effective purchase price to UGX 140 per share—a discount of UGX 30 from the current market price of MTN shares.
Prospective investors should consider a long-term perspective for this investment, maintaining their holdings in the short to medium term to mitigate any market price distortions.
However, should the share price rise above UGX 170, it may still be advisable to retain the shares for an extended period. MTN Uganda is known for being a dividend-paying stock on the Uganda Securities Exchange (USE), distributing dividends to its shareholders at least twice annually.
According to last year’s financial statements, the company paid a total dividend of UGX 18 per share, equating to a 10 per cent dividend yield, and has occasionally offered even higher yields.
While some analysts suggest that this trend may not persist in the medium term as the company balances capital investments with its dividend policy, the continued payment of dividends will enable investors to recover a portion of their investment over time. A company on pace to making over Shs 3 trillion revenue by 2025 is worth having a share of it.
The writer is a financial analyst.
Source: The Observer