The Botswana Telecommunications Corporation Limited (BTC), the only local listed telco-operator has been stable over the last couple of months.
This stability is due to an increase in knowledge of stocks by some retail shareholders and an uptake of the BTCL stock by astute investors who know the shares are undervalued.
Long term investors were not moved by the short-term volatility of the BTCL stock in the past which experienced some knockdown effects as the fundamentals remained strong for the business.
The stock which went down to as low as 89 thebe over the months closed the year 2019 trading at a high of P1.02. Unfortunately, to start the year, this week it dropped a little to trade at 95 thebe.
Garry Juma Motswedi Securities Head of Research and Executive Director says: “In fact, any short-term weakness should be taken as an opportunity by astute long-term investors to increase their holdings. We have seen it before how some astute investors have taken advantage of BTCL share price drop by increasing their holdings and they have been rewarded handsomely when the share price picked up,”
For its interim financial results for the six months ended September 30th 2019, the BTCL recorded a 4 percent increase in total revenues translating to P719m in comparison to P694m in the prior half year. The positive trend in revenue was due to an increase in data revenues from both Fixed and Mobile Businesses.
The only local listed telco- operator in the country recorded a profit of P83million, while the total assets increased from P2. 4 billion to P2. 6 billion.
The telco-operator is expected to continue posting impressive results despite the harsh economic conditions defined by below par diamond exports.
Looking ahead the BTCL Board and management have vowed to continue to focus on commercializing the significant investment that was made on networks (both mobile and fixed) and IT infrastructure to position the Company to deliver unparalleled customer experience and position the Company for sustainable growth.
“To improve profitability margins, the Company will focus more on improving efficiencies in the areas of transmission, billing systems convergence, the consolidation of support contracts and the introduction of digital channels to enable customers to do self-service. The Company will also continue to focus on its customer service strategy to improve the turnaround times for installations and repairs thus improving customer service,” reads the financial statement from the Board led by Lorato Boakgomo-Ntakhwana.
The company has always decried of competition in the telecommunications sector which continues to intensify with the entry of new internet service providers leading to a downward pressure on prices. This continues to have an impact on BTCL’s performance each reporting period.
The BSEL market performance report of January 2019- 17th December 2019 show BTCL as amongst the seven listed companies that recorded a less than 10 percent share price change from year-to-date.
Nonetheless, despite this setback, to-date BTCL has by far the highest dividend yield on the BSE. It remains unmatched since listing on the local bourse three years ago.
The performance of some local companies including BTCL has been attributed to the depressed local markets and global uncertainties.
The Economic Review of Q3 2019 with contributors such as Keith Jefferies highlights that the year has been defined by below par diamond exports dropping to as much as 50 percent. The environment is subdued despite a tight leash on inflation and bank rates.
Due to the tough trading environment, which has been quite a challenge for the private sector, the stagnant household income has affected the average revenue per user (ARPU).
BTCL, however, has been defiant in defending its sustainable competitive advantage of a network which envelopes not just the eastern corridors of the country but every city, village and area across Botswana.
The company has made huge contributions towards heightening its competitive advantage in the market and thus proves an ideal haven for long-term investors.
BTCL is unparalleled in mobile network coverage which covers the whole country estimated to cover 90 percent of the population. The firm’s network coverage pans across previously undeserved remote areas where competitors have little to no presence.
BTCL’s investment case is supported by strong fundamentals such as Convergent product offering – Given BTC’s unique position as the sole fixed network operator, the firm is able to offer its fixed, mobile, and other products and services in a convergent portfolio. Leveraging on this competitive advantage is a key component of its commercial strategy.