Kenyan investors locked out of Tanzania telcos’ share sale

Money Markets

A trader at the Dar es Salaam Stock Exchange. Tanzania’s eight telcos are racing to comply with a new law, which demands that they issue at least 25 per cent of their shares on the bourse. PHOTO | FILE 

By DAVID HERBLING, hdavid@ke.nationmedia.com

In Summary

• The planned public offerings for mobile telephony companies will be limited to Tanzanians.
• Move is despite a 2012 pact allowing EAC investors to freely invest in partner countries.

Kenyan investors will be locked out of the upcoming initial public offerings (IPOs) of Tanzania’s privately-held telcos, including Vodacom, Tigo and Airtel, which must list on the Dar-es-Salaam bourse under a new law.

Orbit Securities, a licensed stock broker in Dar, told the Business Daily that the planned public offerings for mobile telephony companies will be limited to Tanzanians, according to guidelines from the capital markets regulator.

Tanzania’s eight telcos are racing to comply with a new law passed in June last year, which demands that all domestic mobile telephone providers issue at least 25 per cent of their shares on the Dar-es-Salaam Stock Exchange (DSE).

“At the moment its only locals who are allowed to participate in the IPOs. Once we are informed by the Capital Markets Securities Authority of the foreign participation, we shall let you know,” said Orbit Securities.

Dar’s move to continue slamming the door on Nairobi puts to question the East African Community (EAC) common market protocol, which provides for free movement of capital, labour, goods, and services.

To date, only two telcos have filed their listing prospectus with the regulator and the bourse: Vodacom Tanzania, controlled by British firm Vodafone and Tigo, backed by Stockholm-based Millicom.

Tanzania’s telecoms industry is seen as lucrative given the growth in mobile subscriptions that hit 39.2 million as at June 2016 with a mobile money market ranked second to Nairobi’s in Africa, whetting the appetite of Kenyan investors who were eying a piece of the cake.

Vodacom, which controls a third of the Tanzanian market, seeks to raise TSh500 billion (Sh23 billion) in the upcoming IPO, according to the issue prospectus.

The value of the Tigo IPO is yet to be disclosed. The company is ranked second with 11.6 million subscribers or 29 per cent of the total as at June 2016, according to the Tanzania Communications Regulatory Authority.

Aritel is ranked third in Tanzania with a 26 per cent market share in the period under review, official data shows.

Other players are Halotel with 2.7 million registered SIM cards, Zantel (1.4 million), Smart (881,756) and State-owned Tanzania Telecommunications Company Ltd with 304,058 subscribers.

Dar partly opened up its capital account to foreigners in 2011 but Tanzania is yet to remove all limits on foreign capital flows and purchase of government securities by non-locals.

The lockout of Kenyan investors comes despite Tanzania being a member of the EAC where partner states treat each other as local investors.

Tanzania is also a member of the East African Securities Regulatory Authorities, which agreed in 2012 to allow regional investors to freely invest in partner countries.

This is the umpteenth time that Kenyans have been blocked from taking part in offers at the Dar bourse, including DSE’s self-listing last year, Mucoba and Mwalimu Banks (2015), Precision Air IPO and Tanzania Breweries Ltd share sale (both 2011).nyans have been treated as local citizens in two offers at the Uganda Securities Exchange: Stanbic and Umeme.

Kenyans have taken part in all the listings at the nascent Rwandan bourse namely Bralirwa in 2010, Bank of Kigali the following year and Crystal Telecom in 2015, which owns a fifth of MTN Rwanda.

Conversely, investors from Uganda, Tanzania, Rwanda, and Burundi are free to invest at the Nairobi bourse or buy Treasury bills and bonds, with EAC citizens buying a chunk of the Safaricom offer in 2008.

The Dar bourse has 25 companies, including seven cross-listings — six of them Kenyan firms trading on the NSE.

They are Kenya Airways, East African Breweries Ltd, Jubilee Holdings, KCB Bank, National Media Group and troubled retailer Uchumi.

The other company at the DSE is Acacia Mining Plc, which also trades at the London Stock