Crystal Telecom will reward its shareholders through a special bonus received from MTN Rwanda in which it has a 20 per cent stake. The move should boost confidence in the telco’s stock, which has lost 32 per cent of its value in seven months.
The Rwandan telco stock dropped to Rwf98 ($0.12) per share last week from a high of Rwf145 ($0.19) recorded during its first day of trading on the Rwanda Stock Exchange (RSE) in July last year.
Crystal Telecom owns a 20 per cent equity stake in MTN Rwanda with the remaining 80 per cent held by MTN Group Ltd — the largest African mobile telecommunications company with operations in 22 countries including Africa and the Middle East.
In a circular to the Rwandan Capital Markets regulators last week Crystal Telecom announced a “special” dividend of Rwf2.21 billion ($2.91 million) to the shareholders, translating to Rwf8.2 ($0.01) per share.
MTN Rwanda is yet to publish its financial results for the period 2015 and declined to confirm the dividends it is dishing out.
“Crystal Telecom is working on a press release that will provide the details required,” said Sharon Mazimhaka, company secretary, MTN Rwanda.
According to RSE the decision to issue a “special” dividend could avert the downward trend of the Crystal Telecom’s share price.
“Crystal Telecom’s share price has gone down but this is positive feedback that the company is still alive,” RSE chief executive Pierre Celestin Rwabukumba told The EastAfrican.
“The company has not completed a full financial year of its own since listing on the exchange,” he added.
According to Robert Mathu, the executive director of the Capital Markets Authority of Rwanda, Crystal Telecom’s dividend policy depends on the financial performance of MTN Rwanda.
“They had promised to issue special dividends from the time of the IPO last year,” he said.
Crystal Telecom was listed on the Rwandan bourse after selling 270.17 million shares to the public through an initial public offering (IPO) that was executed between May and June last year.
The IPO was priced at Rwf105 ($0.13) per share and oversubscribed by 123 per cent.
According to the IPO Prospectus, Crystal Telecom needs to notify all its shareholders of the details of any dividends declared by MTN Rwanda, which it receives.
The telco is expected to pay dividends to its shareholders that coincide with the receipt of any dividend payments from MTN Rwanda.
“Dividends paid by MTN Rwanda to Crystal Telecom will be based on MTN Rwanda’s financial results, and will be as approved by MTN Rwanda’s board and/or shareholders, as the case may be,” reads the prospectus.
Dividends paid by Crystal Telecom incur a five per cent withholding tax applicable to EAC resident tax payers and a 15 per cent withholding tax to any shareholders who are not resident tax payers in the EAC.
MTN Group Ltd is one of the top 10 companies listed on the Johannesburg Stock Exchange (JSE), with a market capitalisation in excess of $30 billion as of end of March 2015.
