VODACOM PREPARES TO LIST ON DAR ES SALAAM STOCK EXCHANGE

Vodacom Tanzania Managing Director Ian Ferrao said in a statement yesterday that the company had submitted the draft prospectus and was ready to work with the regulators in preparation for the IPO. 

Dar es Salaam. Vodacom Tanzania has taken the first steps towards offloading 25 per cent of the company through an initial public offering (IPO).

Vodacom has submitted a prospectus to the Capital Markets and Securities Authority (CMSA) ahead of its envisaged listing at the Dar es Salaam Stock Exchange (DSE) as the telecommunications firm seeks to abide by the Electronic Postal and Communications Act, 2010.

Vodacom Tanzania managing director Ian Ferrao said in a statement yesterday that the company had submitted the draft prospectus and was ready to work with the regulators in preparation for the IPO.

“We are pleased to announce that we have filed our application and draft prospectus for consideration by the CMSA. This document sets out our proposals on the structure and timetable for the listing,” he said, adding that the company expected the draft prospectus to evolve over time.

Mr Ferrao said the company believes that the IPO would be a landmark transaction for the DSE, the people of Tanzania, and the economy at large, and that Vodacom was looking forward to its continued engagement with key stakeholders, including the government, the CMSA, DSE and regulatory authorities before finalising the listing details.

“We remain fully committed to ensuring that the transaction will be a success for all the parties involved and will share further information in due course.”

The CMSA confirmed to The Citizen yesterday that it received the draft document last Friday.

“We received the draft prospectus on Friday. Basically, the prospectus is a bulky document and that makes it difficult for one to categorically state how long the process will take,” CMSA public relations manager Charles Shirima told The Citizen by telephone.

The CMSA and other parties will analyse the draft document to see whether it meets legal requirements.

However, it could not be immediately established how many shares would be floated when the IPO is eventually launched.

According to Tanzania Communications Regulatory Authority (TCRA) figures, Vodacom is the market leader in terms of subscriber numbers among seven players.

It had a 31 per cent market share as of June 2016, with a total of 12.06 million Sim cards.

Tigo and Airtel are second and third with 29 per cent and 26 per cent market shares, respectively. Tigo had 11.6 million Sim cards, while Airtel had 10.3 million.

Halotel, Zantel, Smart and TTCL had 2.7 million, 1.4 million, 881,756 and 304,058 subscribers, respectively.

The Electronic and Postal and Communications Act, 2010, among other requirements, makes it mandatory for telecommunication firms to offload 25 per cent of their shares through IPOs at the DSE.

The Bill that preceded the law was, however, fiercely opposed by telecommunication companies, which, through the Mobile Operators Association of Tanzania (Moat), argued that forcing them to list on the DSE was contrary to other laws such as the Companies Act, and even the Constitution when private ownership of property was taken into account. 

The DSE governing council chairman Peter Machunde resigned after he opposed the Bill, which was signed into law by President Jakaya Kikwete after it was passed by Parliament.

Mr Machunde is on record as having written to the former Head of State, arguing that the mandatory listing requirement would discourage potential long-term investors in capital intensive sectors.

The law was welcomed by the Tanzania Stockbrokers Association (TSBA), which distanced itself from Mr Machunde’s position.

The then TSBA chairman, Mr Leandri Tairo-Urassa, was quoted saying Moat’s reluctance stemmed from the fact that the law would require mobile phone companies to operate transparently by revealing their finances.

President John Magufuli’s government brought back the law in the form of amendments [the Electronic and Postal Communications Act, (Cap. 306)] through the Finance Bill, 2016, which was signed into law in June, this year. The government said the decision was aimed at ensuring that Tanzanians reaped maximum benefit from the booming telecommunications sector.

Finance and Planning minister Philip Mpango told Parliament that the move would also make it possible for the government to ascertain telecommunication firms’ actual revenues so that they could pay the right amount of taxes.

“With this move, existing mobile phone firms will be required by law to list their shares on the stock market within six months from July 1, 2016. Similarly, companies that will be registered after July 1, 2016 will have to list on the stock market after two years of operating in the country,” Dr Mpango said when responding to MPs’ views on the Finance Bill, 2016.