The Botswana Telecommunications Corporation (BTC)’s Chief Executive Officer, Vincent Seretse, praised the liberalization of the telecommunication industry saying it would pave the way for the much awaited privatization of his organization.
Speaking at a dinner at the recently held BOCCIM Northern Trade Fair, Seretse boldly stated that “his corporation was ready for privatization” and also relished the recent liberalization of the telecommunications industry as BTC thrives in competition.
In June last year, the government announced a blue-print aimed at revolutionizing the telecommunication industry in the country ÔÇô including the eventual privatization of the BTC, the country’s sole fixed line operator.
The bold move made by government is part of a larger plan of resuscitating the stalled privatization arrangement following the adoption of the Privatisation Master Plan which has ear-marked Air Botswana and BTC as organizations earmarked for privatization.
“As BTC, we share excitement about competition because the efficient functioning of markets depends on an adequate level of competition between them,” he said.
The key aim of privatization is to improve the efficiency of the public services for the benefit of the customers and, at the same time, to enable individual Batswana to log into the financial markets.
“Customers are the only ones who can benefit immensely from increased competition as it will not only increase the number of players in the market but also create a wider range of products and services from which they can choose from thus driving down prices and improving the economic well being of customers.
“This will in turn affect the margins applied by businesses within the local enterprise such that they will be continually forced to be agile and adaptive well enough to be able to read the market and effect relevant changes in order to survive,” Seretse said.
He said that increased competition stimulates firms to invest capital in their plants, equipment, research and development in a bid to get an edge on their competitors.
”The long term result will be increased productivity, product and process innovation and greater economic growth,” he said, giving neighbouring South Africa as a typical beneficiary of the virtues of privatization.Competition is usually more intense in the service industry like telecommunications, retailing and the financial services sectors, which do not export their product services but rather deliver the product on the spot.
This was exemplified in 1996 when the Botswana Telecommunications authority licensed two cellular phone operators, Mascom and Vista Cellular, now Orange Botswana. The introduction of the two, said Seretse, brought an interesting shift in the telecommunications industry though it eroded some of BTC’s traditional revenue streams, such as the provision of voice services.
With BTA’s recent awarding of the Service Neutral License to BTC, the market has become even more liberalized and already BTC is inundated with enquiries on when they will start operations.
“We are working around the clock to start operations and we will make announcements very soon,” said Seretse.
Seretse also cautioned that competition, as a result of foreign direct investment, has its advantages; it has some serious cost implications for the host country as seen in some SADC countries and Europe. He said that competition has adverse effects on balance of payments.
The initial capital inflow that comes with foreign direct investment must be matched by a subsequent outflow of earnings from the foreign subsidiary to the parent company, whose outflows will be shown as a debt on the capital account.
Some countries have responded to such capital outflows by restricting the amount of capital that a foreign subsidiary can repatriate to its host country.
Some subsidiaries also import a large number of their inputs from abroad resulting in a debit on the current account of the host country’s balance of payments.
Seretse further said that the world has become ubiquitous and competition has become more global, forcing governments to seek new friendships by contracting some of their obligations to the private sector through competitive bids.
“Botswana has not been left behind as office structures will in future attract private funding or partnerships with the private sector,” he added.
Seretse told delegates that though attitudes towards privatization are diverse and predominantly pessimistic, privatization has proved to be for the future.
“Without realizing that such problems are caused by reasons other than privatization, opponents of privatization argue that it increases unemployment, creates monopolies and discourages formation of local capital,” he said.
Seretse said that proponents of privatization argue that countries that privatize realize a wide range of benefits like raising cash to lower national debt, raising foreign exchange and curbing losses incurred by state owned enterprises.
However, Seretse called for more debates to assist the public to appreciate the complexity of privatization, give insights and assist to ground the need for companies to privatize. So far, two big companies Telkom South Africa and a Portuguese telecommunication outfit have been courting BTC with the aim of being strategic partners.