The decision by government to retain a majority shareholding in Botswana Telecommunications Corporation Limited (BTCL) has raised a number of questions among analysts.
However, it is unclear whether questions over government’s majority shareholding have anything to do with the private sector’s call for government to cede its active role in the economy and retain the role of the regulator; or concerns that government makes the private sector bureaucratic and ineffective. The Public Enterprises Evaluation and Privatisation Agency (PEEPA)’s privatisation and eventual listing of BTCL was hailed as a milestone event. In the privatisation, government has put on offer 49 percent of the BTCL shares, of which five percent has been reserved for employees while 51 percent remains with the state.
Whichever side the debate of the majority ownership by government is looked from, the constant factor is the fact that ownership is still in the hands of Batswana. University of Botswana (UB) Development Economics lecturer, Professor Brothers Malema said in the book Delusions of Grandeur: “Through government, all Batswana are shareholders who own this enterprise (BTCL).” This suggests that ownership remains in the hands of Batswana whether through government or individual Batswana. In fact Malema argues that BTCL as a public company will “deprive most Batswana of the ownership of this enterprise by reducing their shareholding from 100 percent to 51 percent.”
The point is that the impact of government as the majority shareholder is that it will, by right, exercise a considerable amount of control on the operations of BTCL and the direction which it takes.
However, pundits posit that such control is not straightforward because government may choose to be directly involved in the day to day business activities or it may keep its distance and bestow its trust on BTCL management to chart the new course. Perhaps then the debate should not be restricted to the mere participation of government in BTCL business but should also ask how much of government’s involvement will be considered right.
Given the nature of telecommunications and the history of BTCL, perhaps the contention on government’s majority shareholding should not be taken lightly. Telecommunications is widely perceived as a right deserving to all individuals regardless of social standing. It is in that regard considered a utility necessary for effective human interaction. Since its establishment in 1980 government has through BTCL ensured that every Motswana gains access to various mediums through which communication is channelled. Magang argues that “it has to be provided at prices consumers from all levels of the social strata can afford.” It therefore becomes reasonable to question how government will balance telecommunications as a social right and telecommunications as a profit making activity.
In its defence, as cited in the book containing all information regarding its privatization, BTCL promises to manoeuvre the highly competitive telecommunications sector, both locally and internationally so that Batswana can reap desirable returns on their investment. It endeavours to do so by maximizing on its unique market position as the only fixed and mobile network operator in Botswana through which it will offer customers products bundled under traditional fixed and mobile broadband, information and content capabilities. Simply put, it will offer voice (fixed and mobile) and data telecommunications services packaged in various bundled products. BTCL’s future direction promises to be a formidable force to be reckoned with in the local market. A question however needs to be asked, how will BTCL fare in the cut throat regional and international market? BTCL has insistently preached its future position as a “world class outfit” in the telecommunications space. If put against a regional and global giant such as Liquid Telecom, will it stand the intense competition? Liquid Telecom is described as the leading independent data, voice and IP provider in eastern, central and southern Africa. It supplies fibre optic, satellite and international carrier services to Africa’s largest mobile network operators, ISPs and businesses of all sizes. In comparison, BTCL could be considered a miniature version of Liquid Telecom and this is because unlike liquid Telecom BTCL does not possess telecommunications infrastructure that enables it to provide connectivity. Had government not stripped BTCL of such infrastructure it would have the same advantage as Liquid Telecom. Government in 2012 created an entirely different organization, Botswana Fibre Networks Limited (BofiNet), and made it the custodian of the infrastructure. What this means is that BTCL, like other network operators pays BofiNet so that it can provide connectivity to consumers. A stock broking firm, Motswedi Securities warned in its research note that BTCL business “is a high volume business with profitability very sensitive to variation in margins. This is because, BoFiNet determines the margins available to network operators and 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.” The question remains, will BTCL portray the flexibility and dynamism needed to take on giants such as Liquid Telecom?