M7 sets tough terms for MTN, wants NSSF to buy shares

Museveni meeting MTN Group CEO Rob Shuter [whiteman]

The National Social Security Fund (NSSF) is set to buy shares in the multi-billion South African MTN telecom franchise. Talks to kick-start the shareholding acquisition process are in high gear and the top management of MTN has disclosed the move and intention to sell shares to NSSF.

According to State House officials, the MTN Group chief executive officer, Rob Shuter, told President Yoweri Museveni during their Wednesday meeting on the sidelines of the World Economic Forum in Davos (Switzerland) that the shareholding discussions between NSSF and MTN are taking shape.

“Shuter said Uganda has only 5% shareholding in MTN and that they are in the process of negotiating over the disposing shares to NSSF,” a statement issued by State House, noted.

During the meeting with Shuter, the President also implored MTN to list on the Uganda Securities Exchange (USE) stock market. To achieve this demand, Museveni said the Government and business leaders should craft a win-win formula devoid of exploitation of the local people.

“We had issues of people cheating our taxes and under declaring calls. We bought our own machines and were able to see all this. It is important that you float shares on the local stock exchange to allow for local ownership, now that the license has been renewed,” he said.

The President underscored that by shareholding, emerging grievances between locals and investors will be minimized. State House reported that Museveni was

“particularly irked by the fact that telecom firms are milking vulnerable Ugandans by not adding value to their products, but instead extending ‘talking’ services that have led to severe leakage of the country’s forex”.

“Pay attention to this issue. Information technology penetration in Africa can end up being a problem. If you are providing a service for people to just talk without creating wealth (then there is a problem). Telecommunications get dollars which they take out, leaking even the little money that the country earns from its exports. You should foresee these trade deficits. More locally owned companies should be allowed to earn money so that most of it remains here,” the President said, according to a press release issued yesterday.

Museveni’s directive that MTN should list on the stock exchange comes at a time when the regulator of telecoms, the Uganda Communications Commission (UCC), is yet to renew MTN’s licence following protests from the Government that the licence fee charged by UCC is too low for a company that has been reaping vast profits for the last 20 years it has operated in the country.

Following the expiry of the MTN licence last year, UCC negotiated a sh217b fee for renewal as opposed to the proposed $100m (about sh375b). Yesterday, when New Vision asked NSSF chief Richard Byarugaba about the NSSFMTN shareholding negotiations, he said:

“We cannot comment. This material is nonpublic information because MTN is a listed company in South Africa.”

If MTN Uganda lists its shares on the Uganda Securities Exchange (USE) as Museveni has guided, it will be the 18th company to do so after the recent listing of Cipla Quality Chemicals. The 17 listed companies on the USE were collectively worth sh22.6 trillion on January 2019, which is about 24% of the wealth of Uganda.

The President met with MTN Group chief Rob Shuter in Switzerland to discuss local ownership of shares A NEW DEAL South Africa-based MTN Group has consolidated its grip on MTN Uganda by increasing its initial 52.01% stake through the acquisition of Sweden’s Overseas Telecom AB 32.44% stake.

The MTN Group also acquired the 12% stake of Tri-Star Investments to push its ownership to 96.45%, according press releases from the group. Tri-Star Investments is a Rwanda-based investment holding company. It is unclear who holds the remaining 3.55%