MTN Rwanda’s move to list on the Rwanda Stock Exchange (RSE) has impelled the closure of Crystal Telecom (CTL). It’s 20 per cent stake that was held in MTN Rwanda is now bound to be directly held by the public. Since CTL was mostly serving as a special purpose vehicle to create an avenue for the public to hold shares in MTN Rwanda, the company’s choice to list on the RSE means that it will no longer meet the requirements for a listed company. It’s on this basis that the Board of Directors of CTL suggested that the firm be delisted from the stock exchange as it will no longer serve further purpose. But what will these changes mean for shareholders? The expected impact on shareholders, according to Pierre Célestin Rwabukumba, the CEO of Rwanda Stock Exchange, is straight forward. Shareholders will be owning the same company only with different registration; direct instead of indirect. What this means is that they will be having more visibility on their company at all levels of governance and accountability as their representation in the board will be of a more direct representation and at the annual general meeting level. “They will be participating in person or by proxy; meaning even in decision making they will have more say from a better informed point of view as opposed to today’s scenario where they get third party kind of information from their representatives of CTL, with no direct link to MTN management and governance,” he said. In terms of profits for the shareholders, Rwabukumba said this will have to depend on market forces as they are the ones that decide the share price on the stock exchange. But again with direct participation in the company shareholding, more information is given and in a timely manner thus the market makes the call. Otherwise most of what happens depends on the performance of the underlying business; that is MTN’s core business but in general news like that is good for the investors due to more transparency that comes with it, he explained. Iza Irame, the Chief Executive of Crystal Telecom, pointed out that with this move, there is no negative impact because shareholders were already partakers of MTN and so what they are creating is mainly efficiency of this transaction. She added that what needs to be understood is that they were already shareholders of MTN since CTL is just an entity, a special purpose vehicle that was put in place just to hold these shares. This, she said, is set to come with a number of benefits such as accessing information and management reports much more easily as there won’t be a third party hence the visibility is greater. The other thing is that tax efficiency will be created since dividends that shareholders receive are only taxed once because it’s not from MTN to CTL and CTL to the shareholders. “Business is still the same. If MTN does well, they will gain more,” she explains. “We are just creating the efficiency of them being able to relate directly to MTN, to hold shares of MTN, get information directly and be able to relate with management directly and most importantly, to remove the tax inefficiency that is created by having a middle entity.”
