Johannesburg - Mobile operator Vodacom said yesterday that it was in talks with the Tanzanian government to extend the time it had to list its shares on the Dar es Salaam Stock Exchange.
Vodacom shares dropped slightly by 0.64 percent to R162.80 on the JSE yesterday.
Tanzania last month passed a Financial Act that required phone companies to sell as much as 25 percent of shares on the Dar es Salaam Stock Exchange to boost local ownership.
“I think the time span that has been put in place is exceptionally short, so we are going to have to work on what we can do to extend that and to understand certain requirements,” said Ian Ferrao, Vodacom’s managing director of its Tanzanian operations.
Resistance
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said: “The Tanzania listing requirement for telecoms companies has been debated over the past two years and it looks like the companies are more in favour of paying a levy instead of listing.
“There are a number of reasons for the resistance to the listing requirement and they include the potential of the parent companies’ shareholdings getting diluted, as well as shallow equity markets in most African countries.”
Takaendesa said Vodacom raised its stake in Vodacom Tanzania to above 82 percent in 2013 and the listing requirements call for at least a 20 percent float on the exchange. This implied that Vodacom’s stake would have to be diluted.
The dilution would obviously be more for other operators that owned bigger stakes in their Tanzanian operations, he said.
“While the potential dilution to Vodacom does not look material, the timing of the listing may be a challenge, given international investors that normally help with liquidity in these markets are kept away by fears of a commodity price driven slowdown in African economies.
“That said, there are potential long-term benefits if operators decide to list in these African markets and those include securing local support when navigating challenging regulatory changes,” Takaendesa said.
Local listing
Sasha Naryshkine, an analyst at Vestact, said Tanzania had a young energetic population with a government that was seemingly spending in order to get the infrastructure moving.
“A local listing would encourage the regulators to be more favourable, knowing that there is a vested interest locally, and that they are not just part of a big global brand. I guess Tanzania is right for Vodacom,” Naryshkine said. The International Monetary Fund has warned Tanzania that debt levels are a problem.
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