MTN Zambia, a local unit for MTN group of South Africa in December 2020 announced that a private share placement had been successfully done with the National Pension Scheme Authority – NAPSA, falling short of directly offering 10% shares to the Zambian public.
NAPSA acquired 8% stake in MTN Zambia in December 2020 in what looks like a compromise deal. However, the license issued to MTN requires that the telco lists 10% with LuSE to members of the public through an initial public offer – IPO.
Zambia’s ICT regulator – ZICTA in 2018 confirmed with the Zambian Business Times – ZBT that they had engaged MTN, the Securities and Exchange Commission – SEC and Lusaka Securities Exchange – LuSE to ensure that MTN meets its license requirement to list 10% through an IPO. ZICTA, SEC are yet to confirm if they have acceded to bending the license condition and instead accept a private placement.
The move by MTN to shed 8% to NAPSA was lauded as a good first step in the right direction, though the 8% minority share to which Napsa agreed to is too little to account for any notable influence of a local entity into MTN Zambia operations. There is need for at least 20% shares for NAPSA as a pension fund to be seen and to actually have significant influence on the telco.
Analysts have argued that there is need for MTN to fulfill the license condition and list on the Lusaka Securities Exchange – LuSE to offer their shares to the public and come under the corporate governance scope that its key competitor such as Airtel Zambia undergoes, to level the telco playing field.
Listing on LuSE ensures that some mandatory information is reported which improves transparency and ensures good corporate governance practices are adhered to. This requirement has been there, and a private placement with a Zambian Pension fund should be used as a cover for the regulatory requirement for the company to the publicly offer its shares to the Zambian public.
And during the unvailing ceremony held in December 2020, NAPSA Director General, Yollard Kachinda stated that “Zambia has in the recent years seen some significant growth in mobile telecommunications and digital technology. Mobile data has transformed the way people conduct their day to day activities such as buying and selling of products and services.,” said Kachinda.
At the same function, MTN Zambia Chief Executive Officer Bart Hofker said “MTN Zambia’s partnership with the NAPSA was a demonstration of the shared vision with the Zambian government to make the telecommunications company a truly Zambian owned company and to continue to contribute to the Zambian economy.”
He added that “as part of our undertaking to the Zambian Information, Communications and Technology Authority (ZICTA), 8% of our shares are now held by NAPSA and this was done through a private placement process.
The private placement process had Stanbic Bank Zambia as transaction advisors, Corpus Legal Practitioners and Eric Silwamba, Jalasi and Linyama Legal Practitioners were the legal advisors.
ZICTA is yet to confirm if the private placement is a deal that has been entered into, to forgo the 10% IPO requirement needed to fulfill the license condition. LuSE needs to attract more companies for it to achieve the intended purpose Of becoming an alternative source of financing for Zambian companies.
