The Botswana Telecommunications Corporation Limited (BTCL) Board of Directors has announced that they anticipate significantly lower than anticipated earnings than was projected in the prospectus. The company has also advised its shareholders to exercise caution when trading with the company’s stock pending the release of the financial results for the year ended March 31st 2016.
A comparison of these expected lower earnings with the company’s past performance shows a contrast, depicting an opposite direction to the past five year growth trend.
“As reported in the Prospectus, the Board of Directors of Botswana Telecommunications Corporation Limited hereby announces that the Corporation’s earnings for the year ended 31st March 2016 will be materially lower than those achieved in the corresponding period in the prior year. The earnings will also be materially lower than projections in the Prospectus, due to a higher than projected actual impairment adjustment against the carrying value of its operating assets,” cites the announcement.
A research note by Motswedi Securities, a local broker firm, cited that BTCL increased its revenue from P1 billion in 2011 to P1.47 billion in 2015, while profit after tax has risen from P177 million in 2011 to a high of P273.6 million in 2013 before falling to P146.8 million in 2015. The past growth trend was experienced prior to the historical listing of BTCL into the stock exchange, which happened slightly over two months ago. An investment analyst at Afena Capital Botswana, Kwabena Antwi highlighted in a previous interview that the company’s financial information shows that since 2012 the corporation has been making a profit, adding that management forecasts also point to future profitability. Antwi had however at the time indicated that the company will experience a financial loss in 2016, consistent with the company’s announcement.
“The only exception is the 2016 financial year where a loss of P128million is forecasted. The cause of the loss is an impairment charge of P306 million against property plant and equipment which management believe is non-recurring charge,” said Antwi previously.
Despite the expected financial loss, both Motswedi Securities’ research note and Antwi expressed confidence in the company’s ability to raise any necessary funds to support its operations.
As a result of its very low debt structure, the company is likely to obtain funds either through the bond market or bank loans to support its growth plans should the need arise.