Tuesday, September 29, 2020

BTC plans massive free float on BSE

Botswana Telecommunication Corporation (BTC) is contemplating the biggest Initial Public Offer (IPO) in the history of Botswana Stock Exchange that is largely geared toward citizen economic empowerment, Ministry of Finance and Development Planning has revealed.

Under the plan, whose final details are still being worked out with key stakeholdersÔÇöincluding the corporate advisors, stockbrokers, asset managers and the stock exchange, BTC is planning to list up to 49 percent stake on the BSE.

This will make BTC the trail-blazing telecommunication outfit to list on the BSE and it is likely to get massive support from BSE and citizen punters alike.

“The process of privatizing BTC would be commenced through Initial Public Offering (IPO), in which share will be sold to Botswana citizens in selected stages but on condition that the government would have the first option when citizen investors wish to dispose of shares,” the office of the Permanent Secretary in the Finance and Development Planning, Solomon Sekwakwa, said.

The move to warehouse certain shares exclusively for citizen investors will be in line with regional trends ÔÇô including South Africa ÔÇô where certain ex-government institutions have reserved given portion of their free float to citizens.

“The shares released to Batswana should not exceed 49 percent whilst government should retain 51 percent of BTC,” Sekwakwa told Sunday Standard.

Although firm plans are not yet on the table with BSE, two months ago PEEPA (Public Enterprise Evaluation and Privatisation Agency) briefed BSE about its plans for BTC. BTC is earmarked to pioneer PEEPA’s plan for massive privatization plan of government institutions and parastatals. Currently, there are over 26 government organizations, which could be privatised if government does not want to crowd out business.

However, this week it emerged that government was not keen to privatise the whole organization ÔÇô especially the infrastructural backbone for security reasons. The argument is that once a private individual has access to the infrastructural backbone, a strategic tool since all network operators, including Mascom Wireless and Orange Botswana, use it, it would become difficult for security agencies to operate with a free hand if it is privatized.

“There are willing to privatise other things except the infrastructural backbone for security reasons. But still without the infrastructural backbone I think it will still be attractive to punters. And it will position itself as the pioneer telecommunication companies to list on the BSE,” a source said.

The infrastructural backbone is worth billions of pula and is one of the most advanced on the African continent, that controls the domestic calls and is also the key on the international gateway.

“I think with 49 percent stake of free float, it will be one of the highest on the board and it will boost the exchange big time,” an insider said.

BTC, which has been in existence since 1980, enjoys monopoly in the provision of fixed line telephone service in the country and has recently entered the mobile telephone competition. The other competitors are Mascom Wireless and Orange Botswana, after the 1998 telecommunication liberalization policy.

It also runs the internet services through Botsnet. Last year, the group excluding the mobile telephone division, had a turnover of P 835 million but that was shaved by huge expenses of P 343 million to leave it with just close to P 120 million in profit.

Sekwakwa said the “key strategic policy objective of privatizing BTC“ are to ensure that the organization has an operational efficiency and up productivity and service delivery. Further, the move is expected to support government initiatives aimed at the diversification of the economy and the promotion of citizen economic empowerment.

“The rationale is to ultimately achieve better and cheaper services and products for Botswana economy and transform Botswana into a regional ICT hub,” he added.

RELATED STORIES

Read this week's paper

The Telegraph September 30

Digital edition of The Telegraph, September 30, 2020.