MTN’S JOURNEY FROM START UP TO THE STOCK EXCHANGE

I remember it like it was yesterday. The first day that telecom company MTN opened for business. I stood in line to get my MTN number, one of hundreds with sh70,000 clenched firmly in one hand and phone in the other. The sim card cost sh30,000 the rest was loaded on the phone as airtime.

Up to that point the sole mobile phone provider Celtel, used to charge for airtime in US dollars and had a punitive service fee  – it cost $10, which lasted a weekend when time was up you could neither receive nor call out.

Their airtime too was very expensive because in November 1998 – my first full month on MTN, the accountants had to call me in because my MTN airtime claim had fallen to sh200,000 from $400 paid to Celtel the previous month, for the same volume of work. The dollar then was about sh1,300.

"But our joy of shedding off the shackles of Celtel were short lived as the MTN system soon, within the hour crashed under the weight of the new numbers. I later learnt that MTN had installed a 14,000-line switch at Mbuya, the planners thought that would be good for a few months were soon back to the drawing board...

I would have paid to be a fly on the wall at the swanky new Celtel headquarters, which they bragged had cost sh4b, when they saw their subscriber numbers fall off a cliff that day.

At the time Uganda was at the tail end of its privatization effort and was moving into the more intricate liberalization phase. I covered the search for a Second Network Operator (SNO) as a journalist and one of MTN’s target as the SNO was to sign up 89,000 new subscribers within five years.  That doesn’t seem like much today but at the time Uganda Posts & Telecommunications Corporation (UPTC) the state owned telecom company had 50,000 subscribers. It was later split in to, which was split into UTL, Posta and Postbank.

By the end of the next year MTN had surpassed its 89,000-line target and I heard there were mutterings in the corridors, that the condition was for copper lines – used by the old analogue phones and not mobile phone lines. Probably a shakedown operation.

MTN has never looked back and to see them in action now one would think they were the pioneers of mobile telephony in this country.

But it’s not only the telecom industry that was shook up.

A few years later MTN went to the banks to borrow the billions it needed to keep up with the huge suppressed demand. I don’t remember the details but the bond the issued for the money was supposed to last five years but after the second year they wanted to pay off the debt. One bank refused to take back their money. Their argument was that they had planned on those cashflows coming in over the next few years and to take the money back now would throw their budget off.

So today when MTN – this country’s only billion-dollar company, announces the details of their share offer, it will belie an adventure the South African company embarked on in 1998 that, along the way, has paid off handsomely for its investors, the economy and its users.

Because people forget that Uganda was MTN’s first market outside South Africa and the one, which pointed to the huge demand for the unique kind of service they could provide, having cut their teeth in the townships of South Africa.

"It’s the Ugandan experience, which emboldened them to go into Nigeria, which long overtook South Africa as its biggest market....

MTN plans to sell about one trillion shillings’ worth of shares over the next six weeks to the public. The price of a share will be announced today but following what is becoming our rule of thumb, one can expect it will be cheaper than a bottle of soda.

While the Umeme share offer of almost 10 years ago raised more than sh100b more than the Stanbic offer, the bank’s offer has been the most exciting to date, but MTN’s offer is set to move the excitement needle beyond red. Not only is it almost ten times bigger than the Umeme offer but MTN’s top of mind recognition among the public is universal and that will count for a lot.

Interestingly across the border the Safaricom initial Public Offer (IPO) in 2008 was also the most exciting share offer on the older Nairobi Stock Exchange (NSE) at the time. At the time Safaricom dominated the mobile phone market, accounting for almost four in every five subscribers and was just getting into data services and M-Pesa – their world renown mobile money service. They have maintained their dominance in the market, some would say have cemented it, and their share price has risen eightfold since the IPO.

MTN now is around where Safaricom was then.