Will BTCL get “Returns” on its investment?

15 Jul 2019

BY VICTOR BAATWENG

Of the three telecos, only BTCL is publicly owned and listed while the other two are yet to reach the shores of the local bourse – Botswana Stock Exchange Limited (BSEL).

This past week, BTCL led by its managing director – Anthony Masunga had no option but to face financial analysts, prospective investors as well as shareholders to share the prevailing “bad news” – the company’s Profit after Taxation has gone down as much as 25 percent.

With a positive energy, Masunga however brushed aside the poor performance and maintained it’s a short term trend.

“This is just an outcome of the last 12 months. BTC is in this game for a long run”, Masunga confidently said as he addressed an audience made up of mostly financial analysts.

But as he continue with his presentation, he puts a question through to his audience, “How many of you could proudly lift their hand as a sign that their company has done exceptionally well in the past year?” None from the attendants raised their hands, giving Masunga an opportunity to continue and justify BTCL’s poor run over the last financial year.

According to the BSEL quoted teleco’s latest financial statements, the company recorded a profit after tax of P162 million during the year under review compared to P217 million registered in 2018. This translates to a 25 percent decline and is mainly attributable to an 8% decline in revenue from contracts with customers to P1.448 million (FY18:P1, 567m), and a 28% increase in depreciation to P199 million (FY18:P156m) due to an increase in investment on mobile and fixed networks.

On the other side, the company’s Operating costs were under control and declined by 4 percent to P693 million (FY18:P723m). This resulted in a 5 percent decline in earnings before interest, taxation, depreciation and amortisation (EBITDA) to P349 million (FY18:P368m).

RETURNS ON INVESTMENTS

Going forward, Masunga says the shareholders should expect better if not good news. He points to some of the BTCL recent projects as source of increased revenue.

“We are moving into the monetisation phase of investments made thus far”. By investments, Masunga refers to amongst others the deployment of 4G network sites (400) across the country, data centre in the capital Gaborone and the expansion of an additional 87 FTTx sites.

As part of its digitalisation program, BTC commercially launched its Data Centre and improved VSAT services in the capital Gaborone. Amongst the data centre key clientele, Masunga said, are commercial banks.

The telecom giant has made significant investments (2019:P410 million vs. 2018:P278 million) in fixed broadband and mobile broadband infrastructure to capitalize on the increased demand and consumption of broadband internet services, and is currently carrying out a growth and transformation focused strategy to remain competitive.

While Masunga has raised hopes of BTCL shareholders and prospective investors, some pundits maintain that it might take a while before the company realise real profit. Even the suggestion that some money could come from the P410 million projects investment has been classified as doubtful.

“I still don’t get how the projects will translate into direct revenues for BTCL. With my little IT knowledge this data centre looks like it will only improve efficiency for BTCL, customer satisfaction and maybe more uptake of their products”, said one local financial analyst a few hours after the financial results of the BTCL.