Monday, January 24, 2022

BTCL’s unique market position not guarantee for success-Analysts

Botswana Telecommunications Corporation Limited (BTCL)’s unique position as a mobile operator and the only fixed line operator in the market should not be misconstrued as a competitive advantage that will guarantee future success, market analysts have warned.

The liberalisation of the local telecommunications industry at the dawn of the millennium ushered in a new era of mobile phones. At the time, it seemed rather inevitable that the fixed line will take a dignified bow after servicing the industry for centuries. True to expectations, the corporation’s fixed line business started declining gradually as it was slowly being replaced by the mobile phone. However, for BTCL, the decision to maintain the fixed line business has paid dividends as the corporation will now be able to enjoy a unique competitive advantage. Through its extensive network, BTCL has a unique opportunity to build value around the combination of its traditional fixed line and mobile capabilities.   

Ahead of its initial public offering (IPO), which will make it the first parastatal to be publicly listed on the Botswana Stock Exchange (BSE), BTCL underwent fundamental changes over the past five years as it morphed into a world class outfit. The transformation led to changes in the corporation’s organizational structure, training and up-skilling of human resource as well as making IT the cornerstone of value addition across BTCL’s products and services.

Motswedi Securities notes that BTCL will anchor its growth path on defending the existing business through sophisticated bundling and packaging of traditional products, promoting BTCL tariffs which are the lowest in Botswana, marketing the BTCL network presence and increased focus on customer satisfaction. 

Motswedi Securities, a stock broking firm explains in its research note that BTCL intends to smartly package unique fixed and mobile value propositions through the provision of traditional fixed and mobile broadband; together with information and content capabilities by way of creating competitive advantages. However, critics have warned that the corporation’s unique market positioning will not suddenly translate into practical and value added solutions. They added that the prospectus does not specify what the offerings entail, which means that it is the onerous responsibility of BTCL to deliver what’s on paper. Motswedi Securities recognizes the risks involved in driving growth, highlighting the intensified competition in the telecommunications sector due to market liberalization. It also cites that the nature of BTCL as a high volume business makes its profitability sensitive to variation in margins.

“This is because BoFiNet determines the margins available to network operators. In some cases BTCL may not be able to pass on to the retailer any margin compression enforced by BoFiNet and this will eat on margins and profitability.”

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