Photographer: Waldo Swiegers/Bloomberg

Vodacom Tanzania Gets Go Ahead to Extend IPO by Three Weeks

Updated on
  • Company is offering 25% after government demanded listing
  • Offer period runs until May 11, listing likely on June 6

Vodacom Group Ltd.’s Tanzania unit received regulatory approval to extend the deadline of its share sale for three weeks, allowing investors more time to take part in the country’s biggest initial public offering to date.

The offer will now expire on May 11, Ian Ferrao, managing director of the Vodacom-owned business, said in a statement on Tuesday. The extension will give retail and institutional investors more time to take part, he said.

“Vodacom Tanzania Plc expects a continued influx of applications for shares during the course of this week,” Ferrao said.

Vodacom, the Johannesburg-based operation of the U.K.’s Vodafone Group Plc, is offering 476 billion shillings ($213 million) of shares in the mobile operator after the government ordered all telecommunications companies in the country to sell at least a 25 percent stake on the Dar es Salaam exchange to boost domestic ownership. Once completed, the sale will boost the bourse’s capitalization by at least 2.4 percent to about 20.7 trillion shillings, according to data on its website.

Vodacom Tanzania May Seek IPO Extension, Foreign Involvement

Core Securities Ltd., a Dar es Salaam-based brokerage, is now more confident of hitting a target to sell 200 billion shillings of the shares, Chief Executive Officer George Fumbuka said by phone on Wednesday. The company had commitments to buy 100 billion shillings of shares as of April 14, he said last week.

“Because of the extension, we might hit it now,” he said.

Getting Organized

The final listing is now expected by June 6, Ferrao said. On April 14, Fortius Rutabingwa, head of market research at adviser Orbit Securities Ltd., said the IPO is undersubscribed.

The extension was granted as prospective investors had requested more time to “organize themselves,” said Charles Shirima, spokesman for the Capital Markets and Securities Authority.

Foreigners are barred from participating in the share sale because of domestic ownership rules in Tanzania. While the CMSA is optimistic that domestic investors will absorb all of the shares, it may consider opening up the offer to foreigners if it’s under-subscribed, spokesman Shirima said in March.

Tanzania’s telecommunications industry was worth about $996 million by the end of 2016, Vodacom said in its prospectus, citing estimates by International Data Corp.

Vodacom Tanzania posted a 9 percent decline in profit last year to 29.1 billion shillings, following a 75 percent drop in 2015. Growth was underpinned by the data and mobile-money payment segments, which grew by 23.7 percent and 10.5 percent respectively, while voice revenue fell by 4 percent.

“The timing of this mandatory IPO has been unfavorable for Vodacom primarily due to current poor liquidity in the market and also coming on the heels of the company trying to recover from a period of financial downturn that started in 2014,” said Nathan Chiume, an independent analyst.