WHEN PAPER DIAMONDS OUTSHINE THE NSSF MAGIC

For years, the lazy story around Kampala was that the Uganda Securities Exchange (USE) was "dead money." It was seen as a sleepy corporate club where capital went to rust while smart investors stuck to risk-free, double-digit government bonds.

But a funny thing happened on the way to the bank.

Institutional brokerage Crested Capital just released its Q3 2026 Total Shareholder Analysis, and it cuts clean through the stories we have been telling ourselves. Corporate Uganda is quietly experiencing an unprecedented operational awakening.

The baseline for investment success here has never been higher. Just the other night, the National Social Security Fund (NSSF) declared a jaw-dropping 22.53% interest rate for the year ended June 2026, crediting a massive Shs5.44 trillion to workers' accounts. It was the highest return in NSSF history.

Yet against that incredible benchmark, a small clutch of local equities—dubbed the "Black Diamonds"—shone exponentially brighter. Crested Capital defines a Black Diamond as a local listed company returning north of 25% over a specified period, handily thrashing treasury bills, standard unit trusts, and the NSSF.

But this glittering performance comes with a serious warning for individual wealth creators: dispersion on the USE is brutal. Select right, and your capital compounds meaningfully. Select wrong, and you can sit on capital erosion for years.

The Performance Sheet

To see how the elite stack up against each other and the wider market, look at the data from the first nine months of 2026:

Counter / Entity	Price (2-Jan-26)	Price (30-Sep-26)	Capital Gain	Total Shareholder Return (TSR)
NIC Holdings	UGX 5.00	UGX 19.00	280.00%	280.00%
Airtel Uganda	UGX 85.00	UGX 189.00	122.35%	128.12%
Bank of Baroda	UGX 47.00	UGX 90.50	92.55%	105.32%
Stanbic Uganda (SBU)	UGX 60.32	UGX 110.02	82.39%	89.52%
Uganda Clays Limited (UCL)	UGX 5.00	UGX 8.40	68.00%	68.00%
MTN Uganda (MTNU)	UGX 315.00	UGX 446.00	41.59%	47.06%
Quality Chemical Industries (QCIL)	UGX 116.00	UGX 161.88	39.55%	45.07%
NSSF FY 2025/2026 (Benchmark)	—	—	—	22.53%

The New Economic Plumbing

These numbers are not abstract paper tricks. They reflect a deep structural shift we have discussed before: telecoms and financial ecosystems have officially become the indispensable plumbing of modern economic life.

Consider the telecom battleground. MTN Uganda recently became the first company in our history to cross the historic $1 billion annual revenue mark (Shs3.6 trillion). Its fintech platform, MTN MoMo, processed Shs195.5 trillion in transaction value.

MTN's transactional volume nearly matches Uganda’s entire Shs200 trillion GDP, functioning as the financial bloodstream of the nation. While MTN leads in absolute scale, Airtel Uganda has displayed sharper data momentum and operating efficiency, fueling its stock re-rating from Shs85.00 to Shs189.00.

In the banking sector, the story is equally deep. Stanbic Bank has flexed its profit muscle, boosting interim dividends by 57.1% to Shs4.30 per share—returning capital to shareholders twice as fast as its underlying profit growth.

However, market dispersion remains unforgiving. While top counters thrive, others like New Vision (-3.33% TSR), BAT (-13.34% TSR), and Umeme (-73.97% TSR) face severe slumps or terminal regulatory risks, proving that selectivity is vital.

Ultimately, paper gains mean nothing until realized. As the report's parting warning notes, the TSR and capital gains are simply paper gains. You need to exit your position to earn the return, rather than watching the market move while eating your seed.

UGANDA TELECOM RACE TIGHTENS

Uganda’s two listed telecom companies turned in strong first-half 2026 results, but beneath the headline growth numbers an increasingly interesting contest is taking shape.

MTN Uganda remains comfortably larger in revenue, customers, profit and dividends. Airtel Uganda, however, grew its underlying operating earnings faster, widened margins and, significantly, generated more data revenue than MTN despite having a smaller overall customer and revenue base.

For the six months to June, MTN reported total revenue of UGX1.888 trillion, 9.7 percent higher than a year earlier, while Airtel’s revenue increased 10.2 percent to UGX1.195 trillion. MTN generated EBITDA of UGX967.5 billion and profit after tax of UGX367.5 billion compared with Airtel’s UGX643.5 billion and UGX224.7 billion respectively.

Financial summary

H1 2026	MTN Uganda	Airtel Uganda
Total revenue	UGX1.888tn	UGX1.195tn
Revenue growth	9.7%	10.2%
EBITDA	UGX967.5bn	UGX643.5bn
EBITDA growth	4.7%	13.4%
EBITDA margin	51.2%	53.9%
Profit after tax	UGX367.5bn	UGX224.7bn
PAT growth	37.7%	13.9%
PAT margin	19.5%	18.8%
Voice revenue	UGX640.4bn	UGX549.5bn
Data revenue	UGX566.8bn	UGX610.6bn
Reported customers	25.4m	19.7m
Capex excluding leases	UGX317.7bn	UGX160.5bn
H1 EPS	UGX16.40	UGX5.60
Annualised H1 EPS	UGX32.80	UGX11.20
Share price, Aug. 26	UGX435.28	UGX171.02
Indicative P/E	13.3x	15.3x
Indicative PEG	0.35	1.10
H1 dividends declared	UGX386.2bn	UGX196bn

MTN reported basic earnings per share of UGX16.40, up from UGX11.90 in H1 2025, while Airtel reported EPS of UGX5.60, against UGX4.90 a year earlier.

For valuation purposes, annualising those half-year earnings gives indicative EPS of UGX32.80 for MTN and UGX11.20 for Airtel. Using their August 26 USE closing prices of UGX435.28 and UGX171.02 respectively gives approximate P/E ratios of 13.3 times for MTN and 15.3 times for Airtel. The share-price data comes from market quotations rather than the companies’ financial statements. (MarketScreener UAE Emirates)

Applying the respective H1 PAT growth rates to those P/E multiples produces indicative PEG ratios of 0.35 for MTN and 1.10 for Airtel. On that simple measure, MTN looks considerably cheaper for the earnings growth being delivered.

But the comparison needs qualification.

MTN’s spectacular 37.7 percent increase in PAT benefited substantially from a 43.1 percent reduction in its tax charge because the comparative period included a once-off transfer-pricing settlement. At the operating level, EBIT increased only 0.2 percent.

That means the 0.35 PEG probably flatters MTN if the current profit growth rate cannot be repeated. Airtel’s 13.9 percent PAT growth was less dramatic but was supported by stronger operating momentum: EBITDA increased 13.4 percent and the EBITDA margin expanded from 52.3 percent to 53.9 percent.

In that sense, MTN looks cheaper on headline valuation, while Airtel’s earnings growth currently looks cleaner.

Airtel wins the data round

Perhaps the biggest surprise in the numbers is data.

Airtel generated UGX610.6 billion in data revenue, up 16.1 percent, compared with MTN’s UGX566.8 billion, up 15.6 percent. Airtel therefore generated about UGX44 billion more from data despite its smaller total revenue base.

Data now represents 51.1 percent of Airtel’s service revenue, up from 48.8 percent a year earlier. Its data customer base grew 18.8 percent to 8.9 million, data usage per customer increased 21 percent and total network data traffic jumped 42.1 percent.

MTN actually reports more active data customers — 12.6 million — but its revenue mix is much broader. Data accounts for about 30.4 percent of service revenue because MTN has another enormous growth engine: fintech.

Fintech revenue increased 10.7 percent to UGX580.6 billion, almost matching data revenue. Active fintech customers increased 11.5 percent to 14.8 million while transaction values surged 26.8 percent to UGX113.3 trillion.

This is arguably MTN’s biggest strategic advantage. Airtel’s Uganda results do not provide a directly comparable mobile-money revenue figure, so the two companies cannot be compared cleanly on fintech from the published numbers.

Margin battle favours Airtel

Another notable divergence is cost efficiency.

MTN’s service revenue rose 9.4 percent but expenses climbed 15.1 percent. EBITDA therefore increased only 4.7 percent and its margin fell from 53.7 percent to 51.2 percent.

Airtel went the other way. Expenses increased only 6.6 percent against revenue growth of 10.2 percent, allowing EBITDA to grow 13.4 percent and margins to expand.

This is why Airtel arguably had the better operating half even though MTN made significantly more money.

Both companies are also spending heavily to protect future growth. MTN invested UGX317.7 billion excluding leases, up 44.6 percent, while Airtel spent UGX160.5 billion, an 82.9 percent increase. MTN raised its 4G population coverage to 93.3 percent and 5G coverage to 25.6 percent.

Airtel rolled out 494 4G sites, 384 5G sites and 1,621 kilometres of fibre and says all its sites are now 4G-enabled. It is also testing direct-to-cell technology with Starlink.

For income investors, MTN remains the heavier cash payer. It declared UGX386.2 billion, equivalent to UGX17.25 per share, in H1 dividends compared with Airtel’s UGX196 billion, or UGX4.90 per share.

So who is ahead?

MTN remains the stronger franchise by scale, absolute profitability, fintech depth and dividend capacity. Airtel currently has the edge in data revenue growth, EBITDA growth and operating-margin momentum.

For investors, the valuation adds another twist. MTN trades at the lower indicative P/E and dramatically lower headline PEG, but part of that advantage comes from a tax-related earnings boost unlikely to recur indefinitely. Airtel is more expensive relative to reported growth, but its improvement is more visibly rooted in operations.

The race is therefore no longer simply about subscriber numbers. Uganda’s next telecom battle will be fought over data consumption, fibre, 5G, home broadband, digital finance and, ultimately, which operator can turn Uganda’s accelerating digital adoption into the highest sustainable return for shareholders.

MTN UGANDA H1 PROFIT JUMPS 38 PCT TO SHS367.5b

MTN Uganda’s profit after tax jumped 37.7 percent to Shs367.5 billion in the first half of 2026, from Shs267.0 billion in the corresponding period last year, helped by growth in data and mobile money revenues and a significantly lower tax charge.

Total revenue increased 9.7 percent to Shs1.89 trillion from Shs1.72 trillion, while service revenue grew 9.4 percent to Shs1.87 trillion. Data revenue rose 15.6 percent to Shs566.8 billion and fintech revenue increased 10.7 percent to Shs580.6 billion. Voice revenue grew more modestly, up 1.8 percent to Shs640.4 billion.

“MTN Uganda delivered a solid performance in the first half of 2026, with improving momentum in the second quarter, as the business recovered from the disruptions experienced earlier in the year,” MTN Uganda Chief Executive Officer Sylvia Mulinge said.

MTN Uganda H1 financial summary

Financial indicator	H1 2026	H1 2025	Change
Total revenue	Shs1.888tn	Shs1.722tn	+9.7%
Service revenue	Shs1.866tn	Shs1.705tn	+9.4%
Data revenue	Shs566.8bn	Shs490.2bn	+15.6%
Voice revenue	Shs640.4bn	Shs629.0bn	+1.8%
Fintech revenue	Shs580.6bn	Shs524.6bn	+10.7%
EBITDA	Shs967.5bn	Shs924.2bn	+4.7%
EBITDA margin	51.2%	53.7%	-2.5pp
Profit before tax	Shs525.1bn	Shs543.8bn	-3.4%
Profit after tax	Shs367.5bn	Shs267.0bn	+37.7%
PAT margin	19.5%	15.5%	+4.0pp
Capex	Shs455.1bn	Shs279.7bn	+62.7%
Earnings per share	Shs16.4	Shs11.9	+37.8%

MTN’s EBITDA grew 4.7 percent to Shs967.5 billion, although its EBITDA margin narrowed to 51.2 percent from 53.7 percent as total expenses increased 15.1 percent. The margin nevertheless remained above the company’s medium-term target of 50 percent.

The strong PAT growth came despite profit before tax declining 3.4 percent to Shs525.1 billion from Shs543.8 billion. MTN said its tax charge fell 43.1 percent, reflecting the effect of a one-off transfer-pricing settlement in the previous year. The lower tax expense helped lift the net profit margin to 19.5 percent from 15.5 percent.

The company continued to benefit from increased use of data and digital financial services. Its overall subscriber base rose 11.2 percent to 25.4 million, while active data subscribers increased 16.3 percent to 12.6 million and fintech users grew 11.5 percent to 14.8 million.

Mobile money transaction volumes increased 9.5 percent to 2.6 billion transactions, while their value jumped 26.8 percent to Shs113.3 trillion. MTN's fintech agent network grew 23.8 percent to 270,500.

Investment also accelerated sharply during the period. Capital expenditure increased 62.7 percent to Shs455.1 billion, while capex excluding leases rose 44.6 percent to Shs317.7 billion. MTN deployed 224 network sites, increasing 4G population coverage to 93.3 percent from 88.2 percent and 5G coverage to 25.6 percent from 19 percent.

Shs8.75 dividend declared

The stronger earnings will translate into another payout to shareholders. MTN Uganda’s board declared a Q2 2026 interim dividend of Shs8.75 per share, equivalent to Shs195.9 billion.

The latest declaration takes total dividends for the first half of 2026 to Shs17.25 per share, or Shs386.2 billion. MTN said the payout reflected the strength of its earnings, cash generation and balance sheet.

The book closure date is September 1, 2026, while the dividend will be paid on Friday, September 18, 2026, subject to withholding tax. Payments will be transferred electronically to shareholders’ bank accounts or mobile money wallets.

Looking ahead, MTN maintained its medium-term guidance for upper-teen service revenue growth, EBITDA margins above 50 percent and capex intensity in the mid-teens as it continues investing in network capacity and expanding its fintech business.

MTN PROFITS MARGINALLY DOWN, BUT MOMO TRANSACTION VALUE RACES AHEAD

MTN Uganda’s first quarter results reflect a business that absorbed a political and operational shock—but still kept its core engines running.

Profit after tax fell 3.8 percent to Shs174 billion, while margins softened under pressure from higher costs, increased depreciation from heavy network investment, and rising finance charges. Yet EBITDA still rose 4.3 percent to Shs462.9 billion, signalling underlying operational resilience.

The defining event of the quarter was the January internet shutdown during the general elections. The disruption curtailed both data services and mobile money access, affecting usage, transaction flows and new customer onboarding.

That impact is evident in the numbers: revenue growth slowed to 7.8 percent, while fintech performance—though positive—was uneven. In a normal operating environment, these segments would likely have posted stronger gains.

Even so, mobile money delivered the standout metric of the quarter.

Transaction values surged 31.2 percent to Shs55.1 trillion, far outpacing the 7.0 percent growth in volumes to 1.25 billion transactions.

This divergence points to a deeper shift: users are increasingly transacting larger amounts on the platform, signalling growing trust and the migration of more substantive economic activity onto mobile money rails.

Fintech revenue rose 7.4 percent to Shs274.5 billion, suggesting monetisation is still lagging usage growth. Data revenue grew 13.6 percent to Shs267.6 billion, supported by a 16.4 percent rise in users—though even here, growth was tempered by the shutdown.

Meanwhile, MTN ramped up investment, with capex (ex-leases) jumping nearly 70 percent to Shs201.5 billion, reinforcing its long-term digital infrastructure play.

Summary of results

Metric	Q1 2026	Q1 2025	% Change
Total Revenue (Shs bn)	914.5	848.0	+7.8%
Service Revenue (Shs bn)	905.9	841.4	+7.7%
Data Revenue (Shs bn)	267.6	235.6	+13.6%
Fintech Revenue (Shs bn)	274.5	255.6	+7.4%
EBITDA (Shs bn)	462.9	444.0	+4.3%
Profit After Tax (Shs bn)	174.0	180.9	-3.8%
Capex ex-leases (Shs bn)	201.5	118.7	+69.8%
MoMo Value (Shs tn)	55.1	42.0	+31.2%

The takeaway is straightforward: the shutdown dented momentum, but did not derail it. If anything, the surge in mobile money values suggests that once normal conditions resume, MTN’s growth story—anchored on data and fintech—remains firmly intact.

MTN VS AIRTEL: SCALE VERSUS RETURNS IN UGANDA'S MOBILE MONEY WARS

There was a time when telecom companies in Uganda fought over voice minutes and, later, data bundles. Today, the real battle is being waged in something far more lucrative: the movement of money. And if the latest 2025 numbers are anything to go by, the contest between Airtel Money and MTN MoMo is no longer about who has the biggest network—but who makes the most from the flows that ride on it.

Start with the headline numbers. MTN Mobile Money Uganda grew revenue by a robust 20.2% to Ushs 1.2 trillion, with profit after tax jumping 23.5% to Ushs 308.9 billion . Airtel Money, on the other hand, posted Ushs 334.1 billion in profit, ahead of MTN in absolute terms, but on a smaller revenue base of Ushs 1.02 trillion, growing at a slower 14.4%.

At first glance, MTN looks like the runaway winner. But look a little closer, and a more interesting story begins to emerge.

MTN is clearly winning the scale game. Its ecosystem now boasts 14.7 million subscribers, 241,000 agents and 115,000 merchants, with transaction values hitting a staggering Ushs 195.5 trillion . These are not just big numbers—they are the building blocks of a platform. The more users, agents and merchants you have, the harder it becomes for anyone else to dislodge you. In fintech, scale is not just an advantage; it is a moat.

But scale, as any seasoned investor will tell you, does not always translate into superior returns—at least not immediately.

That is where Airtel Money’s numbers begin to turn heads. Generating higher profits than MTN on lower revenue suggests a business that is squeezing more out of every shilling that passes through its system. In other words, Airtel may not yet match MTN in breadth, but it is arguably ahead on efficiency.

Part of the explanation lies in strategy. MTN is playing the long game. Its own disclosures show that advanced services now contribute over 30% of revenue, driven by lending, savings and payment innovations . It is investing heavily to turn MoMo from a payments pipe into a full-service financial supermarket.

Airtel, by contrast, appears more disciplined—less flashy, perhaps, but highly focused on the core business of transactions and fee extraction. That discipline shows up in the bottom line.

The balance sheet tells a similar story. MTN’s total assets surged 30% to Ushs 1.87 trillion , compared to Airtel’s 13.1% growth to Ushs 1.16 trillion. MTN is building muscle; Airtel is building margins.

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Summary Comparison

Metric	Airtel Money (2025)	MTN MoMo (2025)
Revenue	Ushs 1.02 tn	Ushs 1.2 tn
Revenue Growth	+14.4%	+20.2%
Profit After Tax	Ushs 334.1 bn	Ushs 308.9 bn
Profit Growth	+7.4%	+23.5%
Total Assets	Ushs 1.16 tn	Ushs 1.87 tn
Asset Growth	+13.1%	+30.0%
Subscribers	Not disclosed	14.7m (+6.5%)
Agents	Not disclosed	241k (+13.5%)
Merchants	Not disclosed	115k (+33.6%)
Transaction Value	Not disclosed	Ushs 195.5 tn (+23.3%)

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In the end, this is shaping up to be a classic market contest. MTN is building the rails of Uganda’s digital financial system—wide, deep and increasingly indispensable. Airtel is running a leaner operation, extracting more profit per transaction.

If history is any guide, both strategies can win. But rarely do they win equally. The real question is whether, over time, scale will swallow efficiency—or efficiency will force scale to behave.

MOMO PROFIT UP 23.5% TO SH308.9BN ON TRANSATION GROWTH

MTN Mobile Money Uganda (MoMo) delivered a strong set of results for 2025, with profit after tax rising 23.5% to sh308.9 billion, up from sh250.2 billion in 2024, but the real story lies beneath the headline numbers — in the rapid expansion of its lending business, which is beginning to redefine the platform’s economics.

At the heart of MoMo’s growth is a sharp surge in its loan book. Loans disbursed through the platform jumped 86.2% to sh2.7 trillion, reflecting accelerating uptake of digital credit products under its Pay, Borrow, Invest ecosystem.

This matters because lending changes everything.

For years, mobile money has largely been a transaction-driven business — dependent on fees from transfers, withdrawals, and payments. That model, while scalable, is inherently limited by pricing pressure and the cost of maintaining agent networks. Lending, by contrast, introduces a high-margin revenue stream that is less dependent on transaction volume and more on balance sheet utilisation and risk pricing.

In simple terms:

Payments bring volume. Lending brings margins.

The significance of the sh2.7 trillion in loans disbursed is not just its size, but what it signals — that MoMo is successfully leveraging its data, distribution, and customer base to move into financial intermediation. With over 14.7 million active wallets, the platform has a unique advantage in assessing creditworthiness through transaction histories, enabling it to scale credit faster than traditional banks.

Over time, this could become the single most important driver of profitability.

Revenue growth anchored on scale and service diversification

Against this backdrop, total revenue grew 20.2% to sh1.2 trillion, up from sh981.9 billion, supported by increased usage across the ecosystem.

Transaction activity remained robust:

• Transaction volumes rose 16.8% to 5.0 billion

• Transaction value increased 23.3% to sh195.5 trillion

• Active wallets grew 6.5% to 14.7 million

More importantly, MoMo is beginning to shift its revenue mix. Advanced services — including payments, lending, and savings — now contribute 30.6% of total revenue, up from 28.7% in 2024.

This shift is subtle but critical. It signals a move away from reliance on basic transfer fees toward a more diversified, and potentially more profitable, fintech model.

Operating leverage begins to emerge

Operating profit rose 26.2% to sh454.1 billion, outpacing revenue growth and indicating early signs of operating leverage.

However, the cost base remains heavy:

• Selling and distribution costs climbed to sh502.7 billion from sh425.5 billion

• Agent commissions and marketing expenses continue to absorb a significant portion of revenue

This reflects the structural reality of mobile money — scale comes at a cost. But as lending and other digital services grow, they offer a pathway to decouple revenue growth from distribution costs, improving margins over time.

Deposits grow to sh1.47 trillion, strengthening funding base

MoMo’s balance sheet tells an equally important story.

Customer deposits — the mobile wallet balances — rose to sh1.47 trillion, up from sh1.37 trillion, a 7.4% increase.

This growth provides the foundation for its lending ambitions.

In traditional banking, deposits fund loans. In MoMo’s case, while regulatory structures differ, the accumulation of customer balances creates a stable liquidity base and opens opportunities for partnerships in credit provision.

The implication is clear:

As deposits grow, the capacity to support lending — directly or through partners — expands.

At the same time, cash and bank balances surged to sh214.2 billion, up from sh78.4 billion, reflecting strong liquidity and improved cash generation.

Assets expand as platform deepens

Total assets increased 14.6% to sh1.87 trillion, driven largely by higher trust balances and cash holdings.

The balance sheet remains highly liquid, but its composition increasingly reflects a financial services platform rather than a pure payments business.

Equity and cash flows signal maturity

Equity rose sharply to sh152.2 billion, up from sh42.2 billion, despite dividend payments of sh198.9 billion during the year.

Meanwhile, operating cash flow rebounded strongly to sh190.9 billion, from a negative sh9.9 billion in 2024 — a clear sign that the business is now generating sustainable cash from its operations.

Why lending is the future of MoMo

The surge in digital lending is not just another growth metric — it is the pivot point for MoMo’s next phase.

If sustained, it could:

• Lift margins, as credit products typically yield higher returns than transaction fees

• Increase customer stickiness, as borrowers are more likely to remain active users

• Unlock cross-selling opportunities, including savings and investment products

• Position MoMo as a financial intermediary, not just a payments platform

But it also introduces new risks:

• Credit risk and potential defaults

• Regulatory scrutiny as the business moves closer to banking

• The need for more sophisticated risk management systems

The bigger picture

The 2025 results show a business at an inflection point.

MoMo is still driven by transaction growth — sh195.5 trillion in annual value processed — but it is increasingly being defined by what sits on top of that infrastructure: lending, savings, and digital financial services.

The expansion of the loan book to sh2.7 trillion in disbursements is the clearest indication yet of that shift.

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Summary of Key Financial Results

Metric	2025 (Ushs)	2024 (Ushs)	Change (%)
Total Revenue	1.2 trillion	981.9 billion	+20.2%
Operating Profit	454.1 billion	359.8 billion	+26.2%
Profit After Tax	308.9 billion	250.2 billion	+23.5%
Total Assets	1.87 trillion	1.63 trillion	+14.6%
Customer Deposits (Float)	1.47 trillion	1.37 trillion	+7.4%
Cash & Bank Balances	214.2 billion	78.4 billion	+173%
Total Equity	152.2 billion	42.2 billion	+260%+
Net Operating Cash Flow	190.9 billion	(9.9 billion)	Turnaround
Loans Disbursed	2.7 trillion	~1.45 trillion	+86.2%

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Bottom line:
MoMo’s 2025 results are not just about profit growth — they mark the emergence of a new business model. The surge in digital lending, backed by a growing deposit base and vast transaction data, positions MoMo to evolve into a high-margin financial platform. If executed well, lending could become the engine that transforms scale into sustained profitability.

WE ARE TAXING THE PHONE THAT COULD SAVE UGANDA'S ECONOMY

Nakato sells second-hand clothes in Owino. No bank account. No paperwork trail. No loan officer who would look at her twice. But two years ago, she bought a refurbished Tecno smartphone on instalments. Today, she receives payments on Airtel Money, orders stock from Kikuubo via WhatsApp, and sends school fees to Masaka without leaving her stall. She has never stepped into a bank. She does not need to. The phone is her bank, her market, and her accountant.

And every time she uses it, the government taxes her.

That is where the story begins — and where the policy contradiction becomes impossible to ignore.

Because while Nakato pays a one percent excise duty on every mobile money transaction, her wealthier counterpart moving money through a bank account pays nothing. Same economic activity. Different tax treatment — depending on whether you are inside or outside the formal financial system.

Is it me, or are we taxing inclusion?

Start with the scale of what is at stake.

MTN Uganda’s revenues crossed sh3.6 trillion last year. Airtel’s  

revenues crossed the sh2trillion mark last year. The value of transactions flowing through mobile money platforms two years ago exceeded Uganda’s entire GDP of roughly sh200 trillion. In effect, the sector’s digital rails are now carrying an economy’s worth of value.

And yet we tax the very infrastructure that makes this possible.

Global evidence is unequivocal. A 10 percent increase in mobile or broadband penetration drives between 0.5 and 1.5 percent additional GDP growth. In Sub-Saharan Africa, where mobile is often the first and only access point to the digital economy, the impact tends to be even higher. For Uganda — still largely informal, still under-connected — this is not marginal. It is transformative.

Which makes our policy posture all the more puzzling.

We treat the phone as a luxury good rather than as economic infrastructure.

A smartphone today is not a lifestyle device. It is the entry point to the economy itself. It is a payments platform, a business directory, a logistics tool, a credit history, and a marketplace — all in one. For a trader in Owino or a boda rider in Gulu, it is the most productive asset they own.

Yet we tax it at the border.

Import duties on smartphones raise the cost of entry into the digital economy before a user even switches the device on. Rwanda and Tanzania have taken a different view — lowering device costs deliberately to accelerate adoption, expand mobile money usage, and ultimately widen the tax base through higher economic activity.

The trade-off is straightforward. The revenue collected at the border is small. The growth foregone by keeping devices expensive is not.

Then comes the second layer of taxation — the one that bites daily.

Mobile money transactions attract excise duty. Bank transfers do not.

It is, in effect, a tax on the informal sector’s pathway into formality. The very citizens that mobile money has brought into the financial system — those excluded for decades by traditional banking — are now the ones paying a premium to transact.

And yet mobile money has arguably done more for financial inclusion than any policy intervention in the last 20 years.

From Owino to Gulu to Mbarara, millions now participate in a traceable financial ecosystem. Payments leave records. Records create data. Data enables visibility. And visibility is the foundation of taxation.

URA cannot tax what it cannot see.

Mobile money makes the invisible visible.

This is how informal economies formalise — not through enforcement, but through convenience. When transactions move onto digital rails, the tax base expands organically. Every payment, every transfer, every transaction is a step toward a broader, more measurable economy.

Which is why taxing those transactions is counterproductive.

Lower transaction costs would increase volumes. Higher volumes would expand the pool of traceable economic activity. Over time, government would collect more — not less — revenue, but from a wider base rather than higher rates.

And yet, in a moment of policy irony, the conversation has begun to drift in the opposite direction — proposals to introduce excise duty on bank transactions to “level the playing field.”

Level it downwards.

Tax everyone equally.

It is a seductive argument — and a deeply flawed one.

Because the problem is not that bank transactions are undertaxed. The problem is that mobile money is overtaxed. Expanding a distortion does not correct it. It simply spreads the inefficiency across the entire financial system.

If anything, the logic points the other way.

The rational policy is not to tax banks like mobile money. It is to stop taxing financial transactions altogether.

Remove the friction. Let money move.

Because every transaction cost is a tax on economic activity itself — a brake on commerce, a penalty on inclusion, a disincentive to formalisation. In an economy trying to broaden its tax base, that is the last thing you want.

Kenya’s experience with M-Pesa offers a clear preview. Affordable mobile money enabled households to save, invest, and grow small businesses — lifting many out of poverty. Uganda is on the same path, but with one hand tied behind its back.

The cost of this policy choice is not abstract.

Uganda’s tax-to-GDP ratio remains low, not because rates are insufficient, but because the tax net is narrow. Most economic activity still sits outside the formal system. Every barrier to digital adoption — expensive devices, taxed transactions — slows the migration of that activity into the visible economy.

And every delay is a missed opportunity for growth.

The solution is not complicated.

It is, in fact, disarmingly simple.

First, reduce or eliminate import duty on smartphones. Treat them as productive assets, not consumption goods.

Second, eliminate excise duty on all financial transactions — mobile money and bank transfers alike.

These are not concessions to telecom companies or banks. They are investments in SMEs, in financial inclusion, and in the long-term expansion of the tax base.

Because the phone is not the problem.

The phone is the economy.

And until policy catches up with that reality, we will continue to tax the very tool that could accelerate Uganda’s growth.

MTN SIGNALS THE RISE OF TELECOM AS MAJOR ECONOMIC ENGINE

MTN revenues touched the $1 billion last year, making it the first company in Ugandan history to do so.

The telecom giant reported sh3.6 trillion in total revenue for the year ended December 2025, setting it on the cusp of the billion-dollar club. A year earlier revenues stood at about sh3.15 trillion, meaning the company expanded its topline by roughly 14 percent year-on-year. 

In a country where most companies still measure revenues in billions rather than trillions, that milestone is more than a corporate bragging right. It is a signal of how deeply telecom infrastructure has become woven into Uganda’s economic life...

There is also a certain symmetry to the moment. MTN Uganda is not only the first company in Uganda to generate more than $1 billion in annual revenues, it was also the first Ugandan company to cross the $1 billion market capitalisation mark when it listed on the Uganda Securities Exchange in December 2021.

In other words, MTN first entered the billion-dollar club through investor belief. Today it has entered it again through economic performance.

But the real story behind those revenues lies in a transformation that has happened in less than three decades.

Thirty years ago Uganda barely had a telecom sector in the modern sense. Fixed telephone lines were scarce and expensive, confined largely to government offices and a handful of large companies. Getting a landline could take months.

Today telecom networks carry the lifeblood of the modern economy.

The numbers released alongside MTN’s results illustrate that shift. The company now serves 24.2 million customers, up from roughly 21.6 million the previous year. Active data users have climbed to 14.7 million, continuing the steady growth seen in recent years as smartphones spread across the country. Meanwhile mobile money users have reached about 12 million, up from about 11.3 million in 2024.

Each of these indicators reflects the widening role of telecom infrastructure in everyday economic life.

But perhaps the most striking statistic lies in the fintech ecosystem built around MTN MoMo.

In comments accompanying the results, MTN Uganda chief executive Sylvia Mulinge revealed just how large that ecosystem has become.

“The volume of transactions on our platform increased by 16.8 percent to five billion while the value of transactions increased by 23.3 percent to sh195.5trillion”.”

Those numbers deserve a moment of reflection.

Uganda’s GDP is roughly sh200 trillion. In other words, the value of transactions flowing through MTN's mobile money platform is now approaching the size of the entire economy...

And that number itself has been growing steadily. A few years ago mobile money transaction values were below sh160 trillion. Today they are brushing against UGX 200 trillion.

Telecom networks are therefore no longer just carrying voice calls and WhatsApp messages.

They are carrying the financial bloodstream of the economy.

Every boda fare paid digitally, every school fee sent to a boarding student, every electricity token purchased through a phone flows through this invisible infrastructure.

MTN’s financial performance reflects that structural shift.

The company reported profit after tax of about sh678.8 billion, up from roughly sh641.5 billion the previous year. Earnings per share rose to sh30.3, compared with about sh28.7 the year before.

Those gains may appear incremental at first glance, but they underline the steady compounding of a business that now sits at the centre of the digital economy.

Mulinge herself linked the company’s revenue growth to rising connectivity and digital adoption.

Telecom growth is therefore not simply sector growth.

It is economic growth expressed through digital infrastructure.

When farmers receive produce payments through mobile money, telecom networks earn transaction fees. When families send remittances across the country, telecom infrastructure carries the payment. When small businesses pay suppliers digitally, telecom networks facilitate the exchange.

Telecom infrastructure has quietly become the plumbing of the modern economy.

Mulinge framed the company’s trajectory within MTN Group’s broader strategic ambition.

“As we conclude the Ambition 2025 journey, I am pleased with the sustained progress we have made towards building the largest and most valuable platform business in Uganda.”

The phrase platform business captures the transformation underway.

The old telecom model revolved around voice calls and SMS. The new model revolves around data consumption, fintech services and digital platforms.

Behind the scenes the infrastructure supporting this transformation continues to expand. MTN now operates 549 network sites, while 4G population coverage has reached about 88.6 percent, up from roughly 86 percent last year.

These investments are capital intensive but essential.

Without the network backbone, there is no digital economy.

For investors, MTN’s results carry additional significance. Since its 2021 listing, the company has become the flagship stock of the Uganda Securities Exchange. More than 22,000 Ugandan investors participated in the IPO — many of them entering the stock market for the first time.

The company has also maintained a strong dividend policy, distributing over sh543 billion in dividends, reinforcing its reputation as one of the exchange’s most dependable yield stocks.

And if the trajectory of fintech, data consumption and digital payments continues, telecom networks may prove to be the single most important piece of economic infrastructure built in Uganda since Independence.

 

TELECOM TITANS MTNU AND AIRTEL 2025 RESULTS COMPARISON

For most of the past two decades, Uganda’s telecom story has been framed as a rivalry between two companies: MTN Uganda and Airtel Uganda.

But the 2025 results released by the two operators reveal something much bigger than competition. They show how telecoms have quietly become one of the most powerful engines of Uganda’s modern economy — generating trillions in revenues, handling hundreds of trillions in digital payments, and increasingly acting as the financial plumbing of everyday commerce.

The numbers are staggering.

MTN Uganda reported revenue of Sh3.6 trillion, up 13.6%, with profit after tax of Sh678.8 billion.

Airtel Uganda, whose financials are reported in dollars, delivered profit before tax of roughly Sh2.3 trillion and profit after tax of about Sh1.6 trillion, when converted at Sh3,600 to the dollar.

Two companies. Multi-trillion-shilling businesses. And an industry that has evolved from selling voice minutes to powering the digital economy.

MTN: The Scale Champion

MTN remains Uganda’s telecom heavyweight.

With Sh3.6 trillion in revenue, the company sits among the largest corporate revenue generators in the country.

Its network scale is formidable:

• 24.2 million subscribers

• 12 million active data users

• 14.7 million fintech users

That scale translates into industry-leading profitability.

MTN’s EBITDA margin of 53.8% reflects a business that has reached operational maturity. Telecom economics at this stage resemble utilities: heavy upfront investment followed by long periods of strong, predictable cash flow.

In 2025 alone, the company invested about Sh843 billion expanding network capacity and improving service quality.

Airtel: The Profit Story

If MTN dominates scale, Airtel’s 2025 results tell a story of profit acceleration.

Converted into shillings, Airtel generated roughly:

• Sh2.3 trillion profit before tax

• Sh1.6 trillion profit after tax

That sharp jump in profitability suggests improved operational efficiency and a telecom market entering its cash-generation phase.

In the early years of Uganda’s telecom sector the focus was subscriber growth — building towers, expanding coverage and acquiring customers.

Now the industry has entered its second phase: monetisation.

The Real Engine: Fintech

Yet the most important similarity between the two companies lies in mobile money.

At MTN:

• Fintech revenue reached Sh1.1 trillion

• Transaction volumes hit 5 billion

• Transaction value reached Sh195.5 trillion

Those numbers illustrate how telecom networks have evolved into financial infrastructure.

Mobile money is now the nervous system of Uganda’s economy.

Salaries move through it. Bills are paid through it. Small traders rely on it for daily commerce.

Telecom companies are no longer simply communication networks.

They are digital financial ecosystems.

Data Is the New Voice

Another structural shift visible in the results is the rise of data.

MTN’s data revenue jumped 28.8% to Sh1 trillion, while voice grew just 1%.

The smartphone has replaced the voice call as the primary interface with telecom networks.

Consumers now rely on telecom infrastructure to stream video, transact online, run businesses and access government services.

In effect, telecom operators are evolving into digital platform companies.

A Quiet But Important Change for Investors

One of the most interesting announcements buried in the MTN results is a change in dividend policy.

Previously, MTN Uganda paid dividends three times a year — after the full-year, half-year and third-quarter results.

The company will now pay dividends quarterly.

That may sound like a minor administrative tweak, but for investors it is actually quite significant.

Quarterly dividends mean:

• more predictable cash flow

• shorter waiting periods for income

• stronger appeal for institutional investors

In effect, MTN is positioning itself more clearly as a high-yield telecom infrastructure stock.

What This Means for Investors

For investors on the Uganda Securities Exchange, the telecom sector remains one of the most compelling opportunities on the market.

At current closing prices — Sh472 for MTN Uganda and Sh112 for Airtel Uganda — the valuation picture becomes even more interesting.

Telecom Investment Comparison

Company	Price (UGX)	EPS (UGX)	P/E	PEG		Div Yield	ROIC	Rank (PEG)
MTN Uganda	472	30	15.7	0.69		6.1%	32%	2
Airtel Uganda	112	40	2.8	0.14		7.0%	28%	1

The PEG ratio — price relative to growth — is often one of the most revealing valuation metrics.

A PEG below 1 typically suggests undervaluation relative to growth potential.

By that measure, Airtel Uganda ranks first, suggesting that the market may be significantly underpricing its growth prospects.

MTN Uganda ranks second but remains the higher-quality dividend stock, reflecting its market leadership and stronger fintech ecosystem.

Investment Strategy

For long-term investors, the telecom sector offers two complementary opportunities.

MTN Uganda – Dividend Stability

MTN paid Sh28.75 per share in dividends in 2025, distributing about Sh643.7 billion to shareholders.

With a payout ratio above 75%, the company behaves like a high-yield telecom utility.

The shift to quarterly dividends further strengthens its appeal to investors seeking steady income.

Airtel Uganda – Value and Growth

Airtel’s extremely low valuation relative to earnings growth makes it one of the most interesting value opportunities on the exchange.

If its profit trajectory continues, the current price may eventually look like a bargain.

The Bigger Story

The rivalry between MTN and Airtel may dominate headlines, but the deeper story is structural.

Telecom networks have become the digital backbone of Uganda’s economy.

They connect businesses, enable payments, and power digital commerce.

And as the country continues to digitise, telecom companies will likely remain among the most powerful wealth-creation vehicles on the Uganda Securities Exchange.

For investors, the lesson is simple.

Owning a slice of the network may prove one of the smartest investments of the coming decade.

MTNU SHARE PRICE JUMPS 30 PCT IN POST ELECTION RALLY

Shares of MTN Uganda climbed 29.7% over the past two weeks, rising from Ugx330 on 27th January to a new post-listing high of Ugx428 by February 6, in a rally analysts attribute to pent-up institutional demand released after political uncertainty eased.

Market participants say buying interest had been building ahead of the , with some large investors opting to stay on the sidelines until the outcome was settled. Once election risk receded, that deferred demand appears to have flowed rapidly into the MTN counter, accelerating a price move that had already begun to gather momentum in late January.

The rally intensified in the first week of February, when MTN Uganda gained 18.89%, including a 9.84% rise on the final trading day. Turnover surged to Ugx634.65 million from 1.69 million shares, up sharply from Ugx108.60 million and 331,030 shares traded in the final week of January. On Friday alone, the stock accounted for Ugx103.41 million in turnover, underscoring the scale of institutional participation.

MTN Uganda’s advance helped lift overall activity on the (USE). Weekly market turnover rose to Ugx1.52 billion, more than five times the Ugx303.09 million recorded a week earlier, while volumes traded increased to 22.91 million shares from 3.82 million shares.

Elsewhere, Stanbic Holdings Uganda led weekly turnover with Ugx669.63 million from 9.76 million shares, closing 4.24% higher at Ugx70.36. Bank of Baroda Uganda traded Ugx127.44 million from 2.64 million shares, ending the week at Ugx48.10, up 1.93%.

Other gainers included dfcu Limited, which rose 1.33% to Ugx305, and Quality Chemical Industries Limited, up 0.85% to Ugx118, while Uganda Clays fell 4.0% to Ugx4.80.

The Crested Local Companies Index (C11) advanced to 168.99, reflecting the stronger tone in local equities, as the Uganda shilling also firmed modestly against the US dollar over the week.

WHAT 2025 REALLY TOLD US ABOUT THE USE

The headline from the Uganda Securities Exchange in 2025 was not turnover, nor even the 36.6% rise in the USE All Share Index. It was the emergence of what Crested Capital aptly dubbed the Black Diamonds — a small clutch of counters that delivered returns north of 25% and reminded investors that, even in a shallow market, price discovery still works .

At the top of this glittering pile sat Bank of Baroda, whose share price more than doubled, rising 111.24% over the year. That is the kind of return that forces even the most hardened bond investor to glance sideways at equities. Close behind was Quality Chemical Industries (QCIL) with an 82.68% capital gain, sweetened further by dividends that pushed total shareholder return close to 90%. Stanbic Uganda, Airtel Uganda, and dfcu Limited completed the Black Diamonds list, all posting solid double-digit gains and, in Airtel’s case, an attractive income kicker that lifted its total return to nearly 60% .

These results matter because they cut through a persistent narrative that the USE is “dead money.” It is not. It is selective money. In a market of barely a dozen domestic listings, dispersion is brutal. Pick right, and you compound meaningfully. Pick wrong, and you can sit on capital erosion for years. The same report that celebrated Black Diamonds also recorded painful declines in Uganda Clays and Umeme, whose shares fell over 40% during the year, underlining that risk is very much alive and unequally distributed .

Beyond prices, 2025 also showed a gradual, if uneven, deepening of participation. Equity turnover rose to sh98.4 billion, up nearly 27% from 2024, with activity strengthening through the year as dividend positioning and institutional flows picked up. Yet the market remains heavily concentrated. MTN Uganda alone accounted for almost 57% of total turnover, with Stanbic taking another fifth. Liquidity, in other words, follows familiarity, scale, and balance-sheet comfort, leaving smaller counters largely orphaned .

The contrast with fixed income could not be sharper. Government securities continued to dwarf equities in both scale and liquidity, with accepted bids rising to sh28.8 trillion and secondary market turnover topping sh102 trillion. Bonds remain the market’s workhorse — predictable, deep, and irresistibly convenient for institutions — while equities fight for attention one dividend and one price rerating at a time .

Looking ahead, 2026 will test whether the Black Diamonds story was a one-off sparkle or the start of something more durable. MTN’s long-awaited fintech separation could reshape valuations. Airtel’s push to meet free-float requirements may broaden participation. And Umeme’s arbitration outcome remains a binary event with real consequences for confidence...

For now, the lesson of 2025 is simple. The USE did not reward breadth; it rewarded conviction. In a market this small, alpha does not come from owning everything. It comes from knowing which diamonds are real — and having the patience to hold them when they shine.