Angola is preparing to launch an initial public offering (IPO) for Unitel, its biggest telecommunications company, in 2024. The move is part of the country’s efforts to diversify its economy, attract foreign investment, and capitalize on the growing demand for riskier emerging-market assets.
Unitel, which has a 72% share of Angola’s mobile phone market, is one of the 26 state-owned firms and assets that the government plans to sell this year as part of its largest-ever privatization program. The government nationalized Unitel in 2022 after taking control of the shares held by Isabel dos Santos, the daughter of former President Jose Eduardo dos Santos, and an army general.
According to Secretary of State for Finance and Treasury Ottoniel dos Santos, the IPO will be done through the stock market, and the size, valuation, and timing of the offering will be announced soon. He also said that the government is looking to sell a stake in Banco de Fomento Angola, the nation’s second-biggest lender, which is majority-owned by Unitel.
The IPO of Unitel comes at a time when investors are showing more appetite for emerging-market assets, especially after the US Federal Reserve signaled that it will keep interest rates low for longer. This has boosted the prospects of countries like Angola, which rely heavily on external financing and have been hit hard by the COVID-19 pandemic and the slump in oil prices.
Angola, Africa’s second-largest oil producer, has been implementing a series of reforms to improve its business environment and reduce its dependence on oil, which accounts for more than 90% of its exports. The country has also secured debt relief from some of its creditors, including China, its largest lender.
The privatization program is expected to generate about $4 billion in revenue for the government, which will help it reduce its fiscal deficit and public debt, which reached 123% of GDP in 2023. The program also aims to increase transparency, efficiency, and competitiveness in the Angolan economy, which is forecast to grow by 2.8% in 2024, after a slight recovery in 2023.
Unitel, which was established in 2001 as a joint-stock company, operates a network based on GSM and UMTS standards and provides voice communications, text and multimedia messages, and mobile internet access. The company also has a presence in other African countries, such as Sao Tome and Principe, Cape Verde, and the Democratic Republic of Congo.
The IPO of Unitel will be a milestone for the Angolan telecommunications industry, which has been dominated by two players, Unitel and Movicel, for decades. The government has been trying to introduce more competition and innovation in the sector and has recently awarded a third mobile license to a consortium led by Angola Telecom, the state-owned fixed-line operator.
The IPO of Unitel will also be a rare opportunity for investors to participate in the growth of one of Africa’s largest and most dynamic markets, with a population of about 33 million and a mobile penetration rate of about 50%. The IPO will also support the country’s efforts to enhance its digital infrastructure and connectivity, which are essential for its economic and social development.
Source: Bloomberg
