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Vodacom’s slow Dar cash call ends today

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A man enters the trading room of the Dar es Salaam Stock Exchange in Tanzania on January 11, 2010. file photo | nmg

The Tsh850 per share offer (Sh39.50) was due to close on April 19 but this date had to be revised to allow foreign investors to buy the stocks following reports that the IPO was undersubscribed.

Fresh changes to Tanzania’s laws allowed non-locals to take part in Dar-es-Salaam’s capital markets. Kenyans as well as East African Community investors were initially locked out of the TSh476 billion (Sh22 billion) Vodacom Tanzania offer.

Listing of the 560 million shares on offer is now scheduled for August 15.

More than 40,000 Tanzanians bought shares in the public offer prior to the extension, Vodacom said.

The IPO was likely to struggle to hit full subscription with the lockout of foreign investors, the offer’s lead transaction adviser Orbit Securities said in an earlier interview.

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

Vodacom has 12.41 million subscribers or 30.9 per cent of the total 40.17 million mobile telephony users in Tanzania as at December 2016, according to the Tanzania Communications Regulatory Authority.

It reported a net profit jump of 63.4 per cent to hit Tsh47.5 billion (Sh2.2 billion) as at March 2017 from Tsh29.1 billion (Sh1.35 billion) in March 2016.

Analysts at Exotix say in a research note that the Vodacom Tanzania IPO is highly priced compared to peers such as Safaricom which has a price-to-equity (PE) of 19.63 times.

“Vodacom Tanzania is valued at 24.5x P/E and 7x EV/EBITDA compared to our frontier telcos under coverage average P/E of 19x and EV/EBITDA of 6.3x.” Exotix said.

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