MTC struggles to make the connection

19 November 2021 | Economics

Windhoek • [email protected]

Despite pumping more than N$15 million into the broad-based marketing of its initial public offering (IPO), MTC battled to make the connection with ordinary Namibians and convince them to buy shares in the telecoms giant, which lists on the Namibian Stock Exchange (NSX) this morning.

State-owned Mobile Telecommunications Ltd offered 367.5 million ordinary shares at N$8.50 a share in its IPO, which opened on 20 September. However, when the IPO closed on 1 November, the public had only applied for just over 299 million ordinary shares. The results of the IPO were released on Wednesday on the NSX and JSE.

Government hoped it would raise about N$3.124 billion by offering the public 49% of MTC. Instead, the public – mostly institutional investors – was only interested in 39.9% of the SOE. Nearly N$2.542 billion was raised through the IPO, about N$581.9 million less than government’s target.

Institutional investors like pension funds, which are required by law to invest a portion of their assets under management locally, honoured their pre-commitment and applied for and received shares totalling around N$2.405 billion.

The IPO offered about N$719 million worth of shares to individuals. Although available at only N$8.50 a share, individuals had to subscribe for at least 200 shares, an investment of N$1 700. After that, shares were available in multiples of 100.

The IPO results showed Namibians only applied for and received shares totalling N$137.2 million. In comparison, ordinary Namibians subscribed for about N$244 million worth of Standard Bank Namibia Holdings’ shares in its IPO about two years ago. SBN Holdings’ IPO share price was N$8.90.


Commenting yesterday, Cirrus Capital analyst Jaco Schoombie said the results of the MTC IPO reflects the state of Namibia’s recessionary economy and consumers’ predicament. It also shows that people think there are better shares and asset classes than MTC elsewhere, Schoombie said.

When MTC’s IPO opened, analysts like Cirrus warned that the company will likely face challenges to grow and increase its earnings in future and that this might deter potential investors.

Except for Letshego Holdings (Namibia), all major IPOs for the Local Index on the NSX in recent history – Bank Windhoek (now Capricorn Group), FNB Namibia (now FirstRand Namibia) and SBN Holdings – were substantially oversubscribed. This means that the public applied for more shares than the IPO offered.

Schoombie said Namibia’s regulatory environment played a huge role in the relative success of MTC’s IPO. Regulation 28 of the Pension Funds Act requires institutional institutions to invest at least 45% of their assets under management in Namibia.

“The regulation definitely help with this IPO. But in the longer term one doesn’t want to force institutions to invest in any economy or asset class. One wants them to be exposed to the best economy so that they can grow. Namibia is obviously struggling, so it’s a bit of a problem,” he said.


When finance minister Iipumbu Shiimi announced the listing of MTC, he said half of the money raised would be used to finance Namibia’s budget deficit. At the time, government expected about N$3 billion from the listing, therefore earmarking some N$1.5 billion to help cover the estimated budget deficit of some N$16 billion in 2021/22.

The rest will be “ring-fenced for productive activities and be utilised in a manner that reaps long term benefits for the country”, according to Shiimi’s budget documents.

Schoombie said this probably means it was earmarked for the Sovereign Wealth Fund government intends to establish in the current fiscal year to help to help buffer Namibia against future economic shocks.

A smaller than expected raising through the MTC IPO means the fund will have to “fall in at the back of the line again”, he said.

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