Investors withdraw Vodacom Tanzania share offers

Dar es Salaam. Vodacom shareholders have withdrawn from their planned sale of over two million shares in a deliberate move to remain part of the firm’s Sh400 billion special dividend payout.

Equity market reports show that by Friday last week the Vodacom Tanzania Plc counter had 5,277,677 shares worth Sh4.48 billion in an outstanding offer, but the number had then dropped to 2,636,781 shares on Tuesday.

However, only 557,000 shares have been sold within two days, suggesting that a total of 2,083,896 shares had been withdrawn by investors as they seek to earn a pie of the Sh400-billion special dividend payout. Vodacom announced on Monday this week that it would pay out Sh178.57/share (Sh400 billion in total) as special dividend to its shareholders until November 13, 2020 in a bid to improve capital allocation.

A special dividend is defined as a nonrecurring distribution of company assets, usually in the form of cash, to shareholders.

It is usually larger compared to normal dividends paid out by the company and often tied to a specific event like an asset sale or other windfall event. Analysts say investors’ decisions were largely influenced by the information that is available in the market.

“When there is new information investors decide on how it would be beneficial to them, either by selling or holding. In this case, refusing to sell means you will be able to earn that special dividend payout,” the director of Arch Financial and Investment Advisory Limited, Mr Mazengo Kasilati told The Citizen yesterday. He said the announced special dividend means that an investor who holds one million Vodacom shares will go home with a staggering Sh178 million. The director of operations at the Orbit Securities Company Limited Mr Juventus Simon said the special dividend announcement came as good news to those investors who wanted to sell, because now they can earn more returns while holding their investments.

“There was an absence of buyers at the firm’s counter for quite some time which pushed some of the investors to offer their shares at a lower price. To them, this is good news and that is why they would opt to withdraw orders to sell and instead hold it for the dividend,” he said.

Vodacom’s stock price has however dropped post special dividend announcement by 9.4 percent to Sh770 per share from Sh850 per share of last week.

Dar es Salaam Stock Exchange (DSE) market report on Monday this week 380,730 shares worth Sh308.39 million traded at a weighted average price of Sh810 per share in 82 deals.

On Tuesday, the prices further dropped to Sh770 as the company traded 176,270 shares worth Sh135.72 million in 28 deals, reports show.