Vodacom's Tanzania Unit to Raise $213 Million in Debut IPO

Updated on
  • Offering is first of series of expected stock-market listings
  • Offer values mobile-phone company at 1.9 trillion shillings

Vodacom Group Ltd.’s Tanzanian unit plans to raise 476 billion shillings ($213 million) in a share sale, the first of a series of initial public offerings by telecommunications companies on the domestic stock exchange this year.

The company plans to sell 560 million shares at 850 shillings each after it received approval Tuesday from the Capital Markets and Securities Authority, Godfrey Gabriel, head of corporate and market research at lead manager Orbit Securities Ltd., said by phone from the commercial capital, Dar es Salaam. Charles Shirima, a spokesman for the regulator, confirmed approval had been granted.

Tanzania in June enacted a law requiring phone companies to sell at least a 25 percent stake of their units in the country on the Dar es Salaam Stock Exchange to boost local ownership. The industry has more than quadrupled its subscriber base over the past decade to more than 40 million users, according to the industry regulator.

Vodacom is the country’s largest operator with 31 percent market share, followed by Millicom International Cellular SA’s Tigo, Bharti Airtel Ltd.’s domestic subsidiary and Halotel, a unit of Vietnam’s Viettel Group. Companies registered in Tanzania after July 2016 are exempt from the listing requirement for at least two years.

Market Boost

The shares being offered equate to 25 percent of Vodacom Tanzania, the company said in an e-mailed response to questions. That values the Vodacom Tanzania at 1.9 trillion shillings ($852 million). Safaricom Ltd., East Africa’s biggest mobile operator based in neighboring Kenya that’s also part-owned by Vodacom parent Vodafone Plc, has a market capitalization of 713 billion Kenyan shillings ($6.93 billion).

Vodacom’s offering will boost the Dar es Salaam Stock Exchange’s market capitalization by 2.4 percent to about 20.6 trillion shillings, according to data on the bourse’s website. The share sale is scheduled for March and will be restricted to Tanzanian investors, Emmanuel Nyalalai, trading and data manager at the bourse, said in a phone interview.

“The immediate impact for DSE will be the obvious increase of the market capitalization,” Nyalalai said. “These IPOs have also become a factor in increasing business at the DSE at all levels: trading members, a jump in investors and more liquidity in the exchange.”

— With assistance by Loni Prinsloo

(Updates with comment from Dar es Salaam stock exchange in final two paragraphs.)
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