Wednesday, May 22, 2024

PEEPA strikes the right chord

Citizen investors await with bated breath to claim a stake in the Botswana Telecommunications Limited (BTCL) on the back of the corporation’s envisaged listing on the Botswana Stock Exchange (BSE) next month.

BTCL will become the country’s first public enterprise to be listed on the local bourse in line with the Botswana government’s privatisation policy. The listing is expected to drive the BSE market capitalisation beyond the current P4 billion mark.

Since its inception in 2001, PEEPA which holds the mandate to privatise the country’s more than over 30 public enterprises, has been hoping from one privatisation attempt to another without success.

An upbeat PEEPA chief executive officer, Kgotla Ramaphane, explained that government decided to privatize BTCL in 2010.

After completion of the due diligence and compliance with BSE listing rules and regulations, the transaction for the floating of 49 percent of the corporation’s shares was approved strictly for acquisition by citizens and citizen-owned companies. Five percent of the floated shares have exclusively been reserved for over 900 BTCL employees.

In terms of the deal, government will retain 51 percent shareholding in the corporation which it founded in 1980 to provide, operate and manage the country’s national and international telecommunication services.

BTCL’s listing on the domestic stock exchange is a major feat ÔÇô a first for the privatization agency as previous attempts flopped.

In the past, the agency attempted to privatise Air Botswana but the deal failed as government failed to secure technical partners for the transaction.

The BTCL listing prospectus has not yet been released to guide potential investors on what they expect to reap from investing in the public enterprise.

The corporation has currently embarked on a massive education campaign to ensure that all legible Batswana are able to buy a stake in the envisaged privatization.

Once available, the prospectus will be collected from all BTCL offices as well as Barclays Bank of Botswana branches throughout the country.

The corporation has in the meantime released a pamphlet answering frequently asked questions about the corporation and envisaged accruing benefits for potential investors.

Dubbed Ya Rona Rotlhe, the pamphlet outlines that BTCL is a leading ICT provider in Botswana and the Southern African Community Development (SADC) region.

BTCL was formed ahead of the separation of the incumbent operator, Botswana Telecommunications Corporation (BTC) into two separate entities incorporated under the Companies Act. The two entities are BTCL and Botswana Fibre Networks (BoFiNet).

The corporation’s core business is voice (fixed and mobile) and data telecommunication services through a broad spectrum of converged telecommunication products. BTCL holds licenses issued by (and is regulated by) the Botswana Communications Regulatory Authority (BOCRA).

On the relationship between the two entities (BTCL and BoFiNet), it is explained that the two businesses are run independently of one another. BTCL is wholly corporatised offering both wholesale and retail services.

BoFiNet is 100 percent government owned and is a wholesale provider of national and international telecommunication infrastructure. Its mandate is to provide and operate a telecommunication backbone network infrastructure, to drive connectivity and economic growth. BoFiNet services retail organisations in Botswana’s telecommunications industry inclusive of BTCL.

An Initial Public Offering or IPO is the first offer by a company of its shares for sale or subscription by members of the public. The Botswana government is selling 49 percent of its shares in BTCL through the IPO.

On whether the IPO means BTCL is being sold, the released pamphlet explains in the affirmative. “Yes, however, government is offering 49 percent of the shares of the company, of which five percent has been reserved for BTCL employees. The remaining 51 percent of the shares will be retained by government.”

With regard to how the IPO process ensures that small investors’ interest are safeguarded, the pamphlet explains that a share allotment strategy will be put in place to ensure that all citizens are given equal opportunity to buy BTCL shares.

The benefits of the BTCL IPO include citizen empowerment and citizen entrepreneurship, ownership of BTCL with potential for financial gain, self wealth generation and greater understanding of and participation in economic activity as well as greater potential for sustainable growth for the business.

Five percent of the 49 percent is reserved for the employees and will be delivered through an Employee Share Ownership Plan (ESOP) which has been approved by cabinet.

It is worth noting that the government has since indicated that the five percent shares available under ESOP should remain the ownership of BTCL employees or ESOP at all times.

With regard to how members of the public are expected to participate, the pamphlet outlines that members of the public can collect a prospectus from the offices of the company at various outlets around the country for completion and submission to the company in accordance with the instructions in the prospectus. Additional outlets will be announced in due course.

A prospectus is a formal disclosure document, containing the facts an investor needs to make an informed decision on the purchase of the shares, both for members of the public as well as for employees through ESOP.

BITCL said the prospectus will be issued when the offer is announced. The prospectus will further outline the estimated value and shareholders will have an opportunity to participate at the Annual General Meetings (AGM) where they can take part in discussions about the company as well as participating in the voting for any decisions.

Although there are no monthly charges for owning shares, it is explained that there are administrative charges upon purchase or selling of shares.

Market analysts contacted by this newspaper were not in a position to comment much on the IPO preferring to wait for the prospectus.

Bogolo Kenewendo of Eonsult said it was difficult for her to discuss the issue until the prospectus has been released because the prospectus is expected to give detailed information on the corporation balance sheet, how the share price was determined as well as the assets owned by the corporation.

“It is difficult to speculate on the share price currently. Until and unless the prospectus has been issued, we will just have to wait so that whatever analysis we can make will be based on the availed information. It is then that we will be in a better position to advise the public or make an informed decision on the whole IPO,” she said.

Another market analyst, Geoffrey Bakwena agreed with Kenewendo that it is difficult to give a tentative analysis of the IPO until the prospects is issued, adding that the prospectus would eventually answer most basic questions relating to the corporation and its activities.

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