Shares of Umeme Ltd, the Uganda-based electricity distributor cross‑listed on the Nairobi Securities Exchange (NSE), slipped sharply following the closure of the register ahead of an interim dividend payment of Ush 222 per share with investors reacting to the typical post‑ex‑dividend correction mixed with concerns over unresolved arbitration and weak financials.
Record interim dividend of Ush 222 for financial 2025 triggered a rally in the week leading to the book‑closure date of July 14.
The share price doubled to KSh 24.70 (Ush 700) within 45 minutes on June 24 after the announcement.
At ex‑dividend on July 9, a downturn followed, with investors expecting the classic decline once the dividend entitlement expired and profit‑taking emerged.
Institutional players, driven by the 53% yield and looming arbitration outcomes, continue to influence price movements.
Umeme is embroiled in a dispute with the Ugandan government over a proposed buy‑out worth approximately KSh 1.05 trillion.
A portion has been received (USD 118 million in March), but the final judgment remains pending, heavily influencing future payouts.
With a pre‑tax loss of KSh 510 billion (around USD 167 million), largely due to credit losses and accelerated depreciation as its 20‑year concession ended, Umeme did not issue a profit warning a move that unsettled investors.
While NSE trading saw a surge, the Uganda Securities Exchange remained subdued, exposing a market bifurcation as traders shift positions between the two bourses.
The dividend‑cut correction in Umeme’s stock underscores the typical market behaviour of adjusting for entitlements, but more importantly, it reveals deep structural risk tied to delayed government compensation and weak earnings.
With the arbitration verdict still pending, investors are split between speculative optimism and cautious profit‑taking.
Written By Ian Maleve
