Friday, September 25, 2020

BTC tariffs rebalancing unnerves markets

Botswana Telecommunication Corporation (BTC) sent jittery waves of possible upward inflationary pressures and gloom on its intended privatization plan  as it announced its jerk up  fixed line rentals coupled with an upswing in the local calls when it revises its tariff next month.

The announcement comes at a time when Bank of Botswana is struggling to control inflation, which has pushed through to double digit levels against its target range of  four-to- seven percent that it re-affirmed at its Mid Term Monetary Policy Statement (MPS) review.

However, at the mid terms review,  central bank governor, Linah Mohohlo, warned of inflationary pressures from administrative prices, such as BTC, a hike in public transport fares and fuel prices.
Analysts concurred last week that the move will add to inflationary woes which the central bank is trying to control.

“The move is going to be inflationary and is likely to dent its subscriber base as most of the people will move to mobile┬á telephone networks who already have┬á an advantage of convenience,” Leutwetse Tumelo, an analyst at Capital Securities said Friday.

BTC chief executive officer, Vincent Seretse, said Tuesday that residential fixed line rental will balloon from P 35 per month to P 60 per month, while commercial rentals will jump up from P 60 to P 100 per month.

Further, he indicated that under the tariff re-balancing  the local call rate per minute is likely to  go up while the international  calls rate are expected to go down.

“BTC┬á should have adopted more of a gradual increase rather than┬á such a big jump,” he added.
At  the announcement of its results, Seretse indicated that  revenue  for the year to the end of March 30, 2006,  moved up by seven percent to  P 686 million while profit for the year  was 18 percent better to P 139 million.

“The BTC announcement aimed at increasing the rentals is worrying and seems like that there is┬á something which they are not telling us. They have been telling us that they are profitable but where are they now increasing the rentals,” an analyst at African Alliance, Kudzani Pickup said,┬á adding, “It is either their financials are not reflecting the truth or there is something totally wrong.”

Since the launch of  mobile telephone network in the country, the BTC has been loosing  subscriber base at an alarming rate of 4, 300 per annum to the current  132,000 subscribers.

The move was sparked by its problematic billing system which┬á costs it millions of pula and┬á depletion of subscriber base. However, the mobile network companies’ subscriber base has sharply increased to record height from 500,000┬á subscribers some two years ago to the present figure of P 823,000, largely driven by the pre-paid product.

“ If BTC is going to loose the┬á subscriber base like it is set to, it is going to be difficult for them to get a strategic partner. The strategic partner will be looking at something that has got an upturn,” Tumelo said.

“It is like they are trying to make profit from the calls which is very illogical in the telecommunication industry. Telecommunication companies make profit through added products while the cost for making a call is expected to be cheaper,” he added.

Part of the explanation, which BTC has given, is that it wants to re-coup costs incurred while putting up the rural infrastructure and also try to align its costs to the international benchmarks.

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