Airtel IPO: A Long-Term Investment Opportunity
October 9, 2023
Friends,
Happy Independence Day to our Motherland Uganda.
As we reflect on the 61 years of Uganda independence, we cant stop to imagine the next 39 years, and how they will be, especially in the field of finance and investment and noting the future of investments which, to me is into Capital Markets, like it is globally.
The Future of Investments is boldened in Stocks and Equities, whether both publicly listed on USE or other platforms, or private Equity investments for the High-Net-worth Individuals.
Today allow me, for the last time this week to highlight about the Airtel IPO. The offer period ends on Friday October 13, 2023, so I wanted to make sure you had enough time to make a decision about whether or not you want to purchase shares.
In the past 1 month, we have talked about Airtel’s fundamentals as a Telecom Company. Making close to 1.6 trillion in Revenue, being the second biggest telecom company with a license of up 2040 and with one of the best attractive dividend policy as stated in their prospectus.
Even then, we have also talked in detail about the risks or shortcomings of Airtel Uganda, especially understanding that the Airtel Money Business is not included in the listed entity, challenging if 100 UGX per share or 4 trillion UGX valuation is indeed the collect valuation of the Entity.
If you're considering investing in the Airtel IPO, I thought I might highlight for you the price fluctuation one more time.
Price Fluctuations of Share prices.
The Airtel IPO share price is UGX 100, and the biggest question many of you have asked, what if the price goes down. Indeed, one of the biggest risk investing in Stocks and Equities is price fluctuations, that in a few months from the IPO debut, we might see the price of Airtel below UGX100 like we have seen for MTN Uganda (IPO – UGX 200 and now @ UGX170) and notably CIPLA Uganda (IPO - UGX 262 and now UGX 70) on the USE.
But also, long term, we have always seen stock share prices stabilize and rebounding past their IPO price.
Stanbic Bank Uganda.
We have seen Stanbic Bank trading at UGX 12 per share and now its UGX 31 per share,
UMEME Uganda Ltd.
At one point it reached the lowest point of UGX 168 per share, but now its at UGX 414.
Bank of Baroda Uganda.
Bank of Baroda IPOed at around UGX 2 per share and it’s currently trading at around UGX 15 per share.
If you are thinking of purchasing, have a long-term view of this investment, holding onto your potential stocks in the short to the medium term in case the market distorts the prices, but even then, if prices rise beyond UGX 100, still I would recommend you hold onto them for a little longer.
Airtel Uganda, like the other few stocks on the USE are dividend stocks, which pay out at least once every year a dividend to its shareholders. We have seen from the financial statements and their prospectus, that Airtel has an aggressive dividend policy, in some Financial years paying out more than their Profit after tax. Most analysts in the country have hinted that this might not continue, at least not in medium term as the Company manages its Capital investments with Dividend policy, but for as long as they keep paying something back to their shareholders, especially annually, that will allow those who would have invested in to recoup some of their investments as time progresses.
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I hope you have a great week and potentially invest in Uganda’s Capital Markets.
Alex Kakande