By Andrew Muhimbise
I read and completed the 260-page MTN-Uganda Limited prospectus. It is a beauty of a document, the high quality pictures, and the elaborate explanations among others.
I especially liked the length of which MTN goes to explain regulatory environment risk (UCC). I also liked the green IPO and M-IPO concepts
However, I found the following unnerving
Exact source of bonus shares
I literally turned and twisted all pages of the prospectus but failed to incisively identify where MTN is going to award the bonus shares from.
MTN says they will come from – but when you look at post IPO shareholding (page 30) they still maintain 76% shareholding, how will that be?
MTN-Uganda limited has unissued share capital of 5.6 billion shares, will they pick on those? Is MTN-Uganda anticipating a sure under subscription that will avail these bonus shares?
Dividend Shenanigans (page 32, 33)
Table 9 of the Dividend payment history conveniently excludes the year 2016 where the payout ratio 272% ( compared to between 47.6% and 66.6% for the year 2017 to 2022 was dividend payout 2016 deliberately excluded to drive a certain narrative to deceive prospective investors
For avoidance of doubt all tales have data for 5 years. Did MTN-Uganda lack a row to show the year 2016 for dividend payment history?
MTN-Uganda has already paid a dividend of 230 billion of the projected 325 billion which is 70% [past the 60% dividend policy]
Was this part of the prospectus that Capital Markets Authority approved? isn’t this dividend payment supposed to be highlighted In a easy to see space since it is material for prospective investors especially at page where a projection of earing of 14 per share is displayed to expressively state that 9.8 per share has already ee paid out
Interestingly most shareholders are being told they are buying a share with already 60% of 14 per share profit
Though this action has legal standing, it smirks of financial immorality and will irrevocably erode trust, the kind CIPLA quality chemicals has endowed since listing
Five year forecast missing
Best practice dictates that a listing compay projects its financials so that investors have an idea of what is In the future. MTN-Uganda beig not a kiosk has capabilities to forecast. I also read the MTN Ghana IPO 2018 prospectus – a 156 document with beautiful forecast
‘’ offer is also beig undertaken by MTN group In pursuance of its objective to broaden Uganda shareholding In MTN and provide an opportunity to Uganda investors, including MTN loyal customers , to own a state In the company and participate In its future growth’’ MTN chairman, extract from the prospectus
Mr. Mbire clearly invites investors to participate in the future growth of the company, wouldnt it have ee prudent to show forecast and address the upcoming Achillies heels of when ambition 2025 decouples mobile money in the year 2022?
The eminent removal of mobile money would be reflected for shareholders projected financials 2022, 2023, 2024 & 2025
Did CMA exempt MTN for sharing five year forecast like best practice in the company IPO?
Andrew Muhimbise is a stock Market Retail Investor with over 10 years of Corporate Governance Experience.