The mandatory requirement to have the firms list on the DSE is not a new aspect, it is also contained in the Electronic and Postal Communication Act (EPOCA) of 2010 which required the firms to offer shares to the public and subsequently list with the stock exchange within three years from the commencement of the Act, something that the firms didn’t comply.
Before the enactment of the Finance Act of 2016, the telecommunication firms tried to wiggle out of the EPOCA requirement. Government tried to consult with the mobile phone firms who protested the requirement saying the stock market performance could impact negatively on the share price.
None of the telecoms operating in Tanzania listed at the DSE then. The Finance Act of 2016 which makes the requirement compulsory, gave until December 31st of 2016 for the firms to have prepared their prospectuses for listing at the DSE.
So far only three firms have completed this process; Vodacom Tanzania, a unit of South Africa’s Vodacom; Bharti Airtel; and Tigo Tanzania, part of Sweden’s Millicom. Those who failed to comply to the requirements of the law will be penalized by the Tanzania Communications Regulatory Authority (TCRA).
TCRA Director General Engineer James Kilaba said among penalties that will be taken against the telecommunication companies that have not complied with requirements stipulated in the law include suspension or cancellation of their licences.
In his comment in parliament at the time of passing the Finance Act of 2016 last year, Finance and Planning Minister, Dr Phillip Mpango said the move will enable Tanzanians to own shares in listed telecommunication companies.
Dr Mpango said it will also help the government trace the exact revenue generated by these companies. The country’s mobile telecoms sector has indeed recorded rapid growth over the past decade with mobile subscription rising by 89 percent from 21 million in 2010 to almost 40 million last year necessitating the need to trace revenue generated .
The huge penetrations makes Tanzania’s telecoms market the second largest in East Africa behind Kenya. Mobile phone operators in the country include market leader Vodacom Tanzania, Airtel ; Tigo Tanzania Zantel, Hallotel, Tanzania Telecommunications Company Ltd (TTCL), Benson Informatics, Mycell, Smart and Smile Communications.
Despite the opposition any company that has ambitious development plans will at some time or another consider seeking listing on a stock exchange. Safaricom the largest mobile operator in Kenya has been performing well at the Nairobi Security Exchange enjoying that advantages that come with listing.
Apparently there are advantages according to experts for the firms listing at a stock exchange which includes raising more money for expanding and grow the business as well as spreading the risk of ownership among a large group of shareholders. Making shares publicly traded provides an exit mechanism for founders and shareholders of the company whose stakes become more liquid and can be cashed-in quickly.
An Initial Public Offering (IPO) and an exchange listing can enhance the reputation of the company and provide additional publicity through increased and continuous media attention.
However as much as it is very rewarding, an IPO is also quite an expensive and rigorous commitment. Apart from underwriter fees, the issuer company will need to ensure that it complies with best corporate governance practices and remains at all times transparent to the public, its existing and potential shareholders.
This, apart from the annual audit, implies maintaining an up-to-date website, setting up communication channels including media, establishing an Investor Relations function.
An Investor relations (IR) refers to the function within a public company that is responsible for managing and communicating information to the public pertaining to the company’s operations, managerial organization, and financial standing, according to the google search.
Daily News
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