Wednesday, October 21, 2020

Inside BTCL’s triple fall

BSE’s only quoted telco – Botswana Telecommunications Corporation Limited (BTCL) has paid out nearly P100 million to shareholders, appeasing them at a time when the company’s share price has fallen to record lows and profits continue their descend.

Amid the steady decline in profitability and the stock value, the company’s dividends paid to shareholders have also decreased over the years, might not be trickling as usual in future. According to the telco’s 2020 annual report, dividends amounting to P97.7 million were paid to shareholders during the financial year ended March 2020. The proceeds are part of the interim dividend of 3.57 thebe per share paid in February before the company decided not to declare further dividends for the year as its usually the norm.

“Though the Board recognises the importance of dividends to our shareholders, due to uncertainties presented by the COVID-19 pandemic, the Board has opted not to declare a final dividend for the second half of the year,” the company said in the annual report.

“The Board, although prudent, is content despite the reduction in the profitability over the years, BTC cash-flows remained positive which enabled it to internally finance its capital expenditure program and pay dividends.” 

The fall in dividends paid to shareholders over the past three years are also down to the company’s weakening bottom-line. In 2017 when the telco registered profit after tax of P237 million, it paid out P90.3 million in dividends, and when profitability fell to P217 million in 2018, BTCL shelled out P155.6 million to investors. Profit further declined to P162 million in 2019, with dividends paid out also falling to P139 million for that year. The P98 million dividend forked by BTCL for this year is the lowest since the company listed, equally reflecting the record low profit of P106 million for the financial year ended March 2020.

BTCL listed on the Botswana Stock Exchange (BSE) in 2016, becoming the first and only telecommunications service provider listed on the local bourse. The listing was the result of government’s decision to reduce its 100 percent stake in BTCL to 51 percent, reserved only for citizens. The  Initial Public Offering (IPO) was oversubscribed 1.68 times and remains one of the most iconic and historic initial public IPOs in Botswana. The shares priced at P1 a piece attracted over 50,000 Batswana shareholders to the company and introduced many for the first time to the stock market. Prior to that there were only 28,122 registered Central Securities Depository Accounts (CSD).

However, the stock price has fluctuated over the years, going as high as P1.54 and plummeting to the current low of 78 thebe per share- losing 17 percent of share value since the year began. At the current price, BTCL is trading 22 percent below its listing price. The stock price volatility has been attributed to the dominance of novice retail investors that dominate the BTCL shareholders base. In addition, limited participation by institutional investors due to foreign shareholder restriction is said to have led to the stock’s volatility as price discovery remains obsecured.

Besides the government’s controlling 51 percent stake, about 14 percent is held by institutional investors, while 31.69 percent shareholding is spread among the 43,110 individual investors. This means BTCL has lost nearly 7,000 Batswana shareholders since it listed four years ago, many of them frustrated by the unstable share price movements.

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