It’s another poor run for BTCL…

24 Jun 2019

BY KABELO SEITSHIRO

Shareholders of the Botswana Telecommunications Corporation Limited (BTCL) should gear for yet another round of financial figures that portrays a rough operational year.

Already a cautionary statement has been released by the BSEL quoted teleco that signals that the company’s profit before tax for the year ended 31 March 2019 is likely to be lower than the one achieved during the corresponding period in 2018.

According to the cautionary statement sent to investors and shareholders this week, the company expect its Profit Before Tax doe the year 31 March 2019 to be between 20 – 25 percent (P53 million – P66 million) lower than the P264 million achieved in 2018.

Given the poor run, it is not yet clear whether the BTCL board will declare any dividend payments to the shareholders. BTCL’s top six shareholders include the government with its 54.16 percent, Botswana Public Officers Pension Fund with 7.37 percent, Farouk Ismail (0.69%), Debswana Pension Fund (0.63%), Botswana Police Savings and Loan Guarantee Scheme (0.52%) and Motor Vehicle Accident Fund (0.40%).

MOST BRUTAL BEATING

In 2018, BTCL – which is the only listed teleco, had its performance becoming the subject of speculation amongst the market players including ordinary shareholders.

At one point during the year, Garry Juma - a stock analyst at Motswedi Securities broking firm cautioned that the BTCL stock performance going forward will remain volatile due to retail investors who hold bulk of the shares. Retail investors tend not to generally follow any fundamentals.

“The upcoming interims will be key in the share price performance and once again all eyes will be on the dividend,” Juma said.

Anthony Masunga, BTCL managing director, made it known at the 2018 Annual General Meeting that the share price fluctuation - which for the past months has been on the downward, can be traced to retail investors (individual investors). Masunga was responding to one of the shareholders who wanted to know why it appeared that the stock seemed to be more volatile that its peers on the BSEL.

Masunga started off by explaining that share price is driven by issues of demand and supply. Then he let it rip, saying that the stock volatility can be attributed to “the dominance of retail investors on the BTC shareholders base” and that most retail investors were first time buyers with limited understanding of how the stock market works.

“For example, some tended to sell when they have immediate short term cash needs, no matter the prevailing price share price for paying costs such as school fees and they will take whatever price they can get,” charged Masunga. “Some retail investors tend to panic when the share price declines and want to exit before the price declines further, not seeing this as an opportunity to buy more shares.”