Monday, October 18, 2021

What really is going on at BTCL?

The BTCL comes across as a troubled child neglected by the parents.  If information coming out of the markets are anything to go by then the board of the telecommunications giant needs to up its game before the company start losing out on both existing and potential investors. As a listed company, this could only translate to one thing, subsequent damage to the company’s bottomline profits.

By close of business on Friday at the Botswana Stock Exchange (BSE), the BTCL board had three set of bad news to share with the markets. Firstly it has to do with the pending negotiations with employees over a share scheme. For quite some time now the company has been battling to settle a disagreement with its employees over an Employee Share Trust. The outcome of such negotiations, like the company has previously admitted may have “material effect” on the share price of the company.

In a statement released to capital markets in April, the BTCL board told the shareholders that it intends alter the terms of the BTCL Employee Share Trust in order to establish an Employee Share Ownership Plan. The objective of the alteration is to permit BTCL employees to directly own shares and permit them full voting and profit participation rights, together with the ability to buy and sell their shares generally, as distinct to the limited ownership rights in terms of the original Trust. Three months down the line, we are still to know what really transpired regarding that issue.

Secondly, the company announced late last week that it will not renew the contract if it’s incumbent managing director.  Yes, we learnt with shock this week that the BTCL managing director, Paul Taylor will call it a day and step down in about four weeks from now. What a negative signal sent by a recently listed company. Taylor has been with BTCL for the past five years and has guided its subsequent listing on the Botswana Stock Exchange in April this year.

Admittedly the BTCL board chairperson, Daphne Matlakala notes in a statement that Taylor in the five years he has been with BTCL made contributions which include revenue growth of nearly 50 percent.

“He ensured that the business delivered on its strategy”

The question is, with such a decorated record, why send him on the streets hardly six months into the historic listing? What message could the BTCL board be sending to investors out there about the company? Is it an issue of mistrust on Taylor, or perhaps the board is now considering to localise the position as shown by the appointed acting managing director? What really is going on at Megaleng house?

Since its listing about two or three months back the BTCL shares grew to atleast 25 percent. This growth however does not necessarily suggest active participation by investors in the company’s stock. The company, as we all might know has a variety of shareholders but precisely sub divided into institutional and individual. 

As we might all guess, a majority of our people, who are now shareholder of BTCL, are not well vested when it comes to issues of finance and equity investment. More importantly, it is troubling to note that nobody, even during the IPO period made any effort to tell Batswana of the pitfalls of investing in equities.

The third item of the sad news coming out of Megaleng house is that of a possibility of reporting lower earnings.

 “As reported in the Prospectus, the Board of Directors of Botswana Telecommunications Corporation Limited hereby announces that the Corporation’s earnings for the year ended 31st March 2016 will be materially lower than those achieved in the corresponding period in the prior year. The earnings will also be materially lower than projections in the Prospectus, due to a higher than projected actual impairment adjustment against the carrying value of its operating assets.

Shareholders are accordingly advised to exercise caution when dealing in the Corporation’s securities until the results are announced.” this is part of the statement released on Friday.

Although this is normal announcement within the capital markets, for BTCL it is not, mainly because of its populace of ordinary shareholders. The BTCL IPO saw an unprecedented majority of offers made by individuals, with over 90 percent of the 462,000,000 accepted offers received from individuals and citizen owned companies. What interpretation should we make out of the poor anticipated financial results and the sending off of the managing director?

The truth of the matter is that BTCL seems to be effectively a shadow of its past self. This is so because only a part of BTCL, the mobile phone section, called be-mobile holds any real chances of competing in the fast changing technology based technology sector. Even then, beMobile, compared to its director competitors is by any measure a minnow.

To date quiet a number of Batswana are still following the BTCL story. They continue to hackle their minds in deciding whether this is something that they will look back on and wish they had been part of or something that they will be grateful that they weren’t swayed into.

The #Bottomline however is that given the extent to which the listing of BTCL was communicated, there is need to carefully guide its operations and future prospects as they will be used by our people to make future decisions on whether the stock market is a place to take their money to.

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