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.

 

 

 

 

 

INDPENDENCE DAY AND THE DUBAI EXPO

Tomorrow we commemorate 59 years of independence. This year’s celebration comes hot on the heels of an outcry about our underrepresentation, misrepresentation or representation at the Dubai 2020 Expo.

The long awaited Dubai Expo opened its doors to the world last week and for the next six months will be the one place to go to explore countries from around the world, what they are about and what they have to offer.

Uganda has a stall at the Expo and thanks to the magic of technology, Ugandans at home got near real time pictures and video on what we were up to. The criticism came fast and thick after pictures of a few tins of milk, boxes of tea leaves, handwoven baskets and pictures of gorillas came through.

"The critics were scathing in their condemnation --- a lot of it knee jerk reaction and the default mode of the chattering masses online....

The net reaction is that again we had embarrassed ourselves with a sub-standard display, we did not get value for money and of course the top heavy delegation came in for particular flack.

I had to look again.

As I said the critics were either being unfair, disingenuous or downright nasty. I couldn’t think of many other things other than the ones I saw on display that Uganda can be globally competitive in.

The now permanent secretary at the finance ministry, Dr Ramathan Goobi pointed out a while back (when he was s till a mere mortal) that the incoming lane on the Jinja-Kampala highway was lower than the outgoing lane, an indication that the loads coming in are much heavier than the loads going out. A useful proxy to indicate that we import more than we export.

According to the last Uganda Bureaus of Statistics (UBOS) figures in 2019 we imported $7.7b worth of goods while shipping out goods worth $4.4b.

Going by these stats alone it should come as no surprise that Uganda’s shelves at the Expo are a bit bare.

But we don’t have to travel all the way to Dubai for this truth to be evident. Our supermarket shelves are dominated by foreign imports. Granted, its less now than a few years ago but the bias is there.

So the Expo emphasizes a greater challenge, one that dogs us almost 60 years as an independent nation, that we produce little that is internationally competitive – our raw coffee beans, tea leave and fish are about it, low value commodities when we should have got around, a long time ago, to exporting these processed. We would have managed to have a foot in the door of those insanely competitive markets and by now be exporting meaningful quantities.

It can be argued that we have been up to our eyeballs in the business of digging ourselves out of the hole of the 1970s and 1980s, but that line can only go so far.

"The truth is to export we need to ramp up production to multiples of what we consume locally. So currently the only things we produce that could possibly sustain a local industry, let alone meet export demands are coffee, fish, tea, milk and grain...

To show how inadequate our production is, I learnt recently that we produce about 14,000 tons of tomatoes a year, all of which we consume. A cursory look online for plants to process tomato paste, I happened on one which could manage to process 2000 tons daily or would sort our national output in a week and be redundant for the remaining 51 weeks of the year. Ok even if we got a smaller plant that would process 100 tons daily it would have taken 20 weeks to sort out the nation’s harvest.

To have a tomato paste industry in Uganda we would have to increase production by multiples of its current number. And this goes for any other crop we produce.

Taking an industry from zero to exports has been done in our life time and the lessons are there to learn. We did it with sugar, milk and gold.

It takes the execution of a national strategy that includes increasing production, enabling market access, supporting research & development, availability of affordable financing and good management.

So the Expo has reminded us that despite our middle class speaking English and wheezing around in second hand cars, we really don’t amount to much...

One last point and which speaks to our inability to lift ourselves off the floor. The lineup of government officials who were in Dubai for the first week inspired little confidence in our chances of turning our current plight around.

While Uganda Investment Authority (UIA) was present we must know by now businessmen pay little heed to government officials in deciding to invest in one country or another. They prefer to talk to one of their own a fellow business person who has skin in the game.

If there were no serious business people to make the trip with the president at least Uganda Development Bank (UDB), Ugandan Development Corporation (UDC) would have pride of place ahead of politicians, bureaucrats and glad handers.