The ABC of MTC's IPO

A Local Telco’s Million-dollar IPO Finally Brings Namibian Stocks Into Focus

By  |  September 24, 2021

In Africa, there are only a few well-watched and sought-after stock exchanges, with the biggest by market cap being the Johannesburg Stock Exchange (JSE) after which comes the respective bourses of Egypt, Kenya and Nigeria. 

The JSE tops the ranks because of its over USD 1 Bn capitalization (and even the city of Cape Town is soon to get its own bourse), the Egyptian Stock Exchange broke into the limelight courtesy of the local listing and billion-dollar ascension of fintech startup Fawry, while the capital markets of Kenya and Nigeria are often in retrospect due to the size of the economies in which they operate. 

Besides these local bourses and barring the newer attention towards the strategically unified stock markets of  Francophone West African nations, there is hardly any other stock exchange in the continent that comes into the limelight. It is perhaps the running reason homegrown or Africa-focused early-stage, tech-driven companies prefer listing in international bourses, mostly in the United States and China. 

However, recently, one of the rarely talked about local stock exchanges is clocking in on a seemingly newmarket era all by itself. The Namibian Stock Exchange (NSX)—which was set up as far back as 1904—now looks to join the chart toppers by virtue of a local listing from one of the best-known Namibian companies. 

MTC, which is unarguably not only the biggest telecom operator in Namibia but also one of the most valuable ventures in the Southwestern African country is state-owned—with the majority of the shareholding belonging to the government—but that doesn’t seem to stop the company from looking towards a Namibian IPO in November 2021. 

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MTC (Mobile Telecommunications Limited) has announced that it is looking to raise about USD 210 Mn from its upcoming initial public offering, selling a 49 percent stake in what is the largest ever listing by a Namibian company. 

The operator, which is also the first state-owned company to list on the local bourse, sits on 2.3 million subscribers in a country of just over 2.5 million people (as of 2020). The Namibian government will retain its 51 percent stake in the telco while the offered shareholding is being made available with preference to historically disadvantaged Namibians. 

Namibia, although one of the closest neighbors of South Africa (Africa’s most industrialized economy), is a lower-middle-income country—with a per capita GDP that is faintly higher than the Sub-Saharan African average. 

But even though Namibia is an LMIC, only one-quarter of the people residing in the country are decently employed. Plus, about two-thirds of the entire Namibian population live below the poverty line. 

Namibia gained independence from South Africa on 21st August 1993 and up until October 1993, the country’s legal tender was the South African Rand. In September 1993, the Central Bank of Namibia introduced the Namibian Dollar ($N/NAD) as its independent currency. However, while the bourse of South Africa its closest kindred tops the African charts, the Namibian Stock Exchange has a checkered past.

The NSX was established in 1904 to help finance Namibia’s diamond rush but when the frenzy came to an end in 1910, the bourse’s very existence was threatened, until it was eventually shuttered (in same 1910). The stock exchange was reopened 82 years later (in 1992) with some financial help from a pool of 36 Namibian companies. 

But even in its second birth, the NSX has some shortcomings; regardless of the fact that the country’s economy is bolstered mostly by agriculture and tourism, it is other sectors like banking that dominate the local exchange. 

MTC’s IPO makes for the first telco to go public on the exchange, and signifies the start of a turnaround for this historically marred bourse. Should the offering’s performance go as expected, there is a possibility that the appetite for public listings will grow—not only in Namibia but also in other African countries. 

When MTN (Africa’s largest telecom firm) finally went public on the Nigerian Stock Exchange (NSE), the listing effectively made the operator become the second-largest stock by market value and chain-reacted into a timely boon for a local stock market that has steadily declined in its all share index for the years prior to the May 2019 IPO. 

It is likely that a similar scenario will play out in the Namibian market since the IPO’ing company is one of the country’s largest. Nigeria is MTN’s largest market in Africa though the telco is native to South Africa, it’s second-largest market. 

The governments of some African nations have been encouraging (or mandating) telcos operating in their markets to list on the respective local exchanges, sometimes as an ultimatum to remain operational in said markets.

Case in point, the Ugandan government insisted on a local IPO for MTN’s unit in the country in the next 2 years (a period after which it might loose it’s operating license) and that is the reason MTN Uganda is the first telco to list on the Uganda Securities Exchange. 

Likewise, with the nudge of the Malawian leadership, Indian Bharti Airtel’s unit in the country debuted in what remains the largest IPO on the Malawi Stock Exchange. In June 2019, Bharti Airtel’s African subsidiary simultaneously IPO’d on the Nigerian Stock Exchange (again) and the London Stock Exchange. 

With economic hopes high in Namibia, MTC’s listing on the local exchange is premonitive of increased local and international investor attention. 

Featured Image: Crunchbase

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