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BTCL pushes for open trading of its shares

The Botswana Telecommunications Corporation Limited (BTCL) wants the trading of its shares to be opened up to all investors, instead of just citizens, as a way of promoting price discovery and the unlocking of the telecomm giant’s true value.

As the first parastatal privatised via the public offer of shares, the BTCL’s listing on the Botswana Stock Exchange two years ago was unique, with trading limited to citizens and wholly citizen-owned entities. A market maker was appointed to facilitate trade and avoid the supply gluts or shortages that could be expected from limiting share trades.

Government holds 54.2% of BTCL, followed by individual Batswana who hold about 32%. In absolute terms, 45,598 individual Batswana held 331,350,000 shares in BTCL by March 29, 2018.

Brokers and analysts have attributed BTCL’s wild swings in share price on the heavy presence of individual investors, who are associated with impulse trading behaviours such as panic selling. Retail investors are also known to seasonally “cash out” for holidays and other expenditure, which, while it is common behaviour across listed companies, hits the BTCL’s share price hard.

BTCL opened the year trading at P1.84, before plummeting to 81 thebe and then recovering to this week’s P1.14. The swings are despite profits of P217 million for the year to March 2018, maintenance of its debt free status and gross dividends of 13.43 thebe per share.

On Tuesday, group MD, Anthony Masunga told BusinessWeek the opening up of the group’s trading was necessary to accurately produce a value for BTCL and in turn return proper value to investors.

“We have started engaging and I mentioned this at the AGM that maybe it’s time we looked at opening the stock so that everyone can participate and we migrate to the main category of stocks like other listed entities,” Masunga told BusinessWeek.

“If you look at the structure, 80% of our investors hold shares of 5,000 and below, which creates volatility of our stock.

“There’s a limited pool of investors on which the whole counter operates and it swings, typically over holidays, post-December, when shareholdings are turned into a current account for cash.

“Typically, those movements don’t have anything to do with the business itself and they happen when there’s no announcement or development in the business.

“If you look at the movements in the last two or three months, the only event that happened was the release of the financial results and good dividends.”

Masunga explained that the net effect on BTCL was that the share price did not give a true

valuation of the group. The structure of the group’s equity and its share price volatility was a deterrent to institutional investors who had the potential of injecting value in the stock.

 “For us, once you use the share price, it does not give you the true valuation of the company. If you come here and do an assessment of the company itself, the picture will be slightly differently and yet globally, the first port of call for the value of the company, if it’s listed, is to start with the share price.”

He continued: “Because our stock is volatile, it’s a deterrent for others to take a significant position because it’s risky.

“As much as we appreciate the structure of our shareholding, we think there’s more that can be done to help. “A lot of value has been locked up. A lot of value is locked out.” Masunga said while institutional investors were willing to take up positions in BTCL and add value, they were driven away either by the volatility or lack of access. The current policy is that only 100% citizen-owned institutional investors can take up shares in BTCL. “If a fund is ‘tainted’ with 0.001% of non-citizen money, it’s excluded and yet those funds are available in the market and they are participating in other stocks.

“It’s also difficult to build a significant position because the stock is so thinly held; it would take a lot of time,” he said.

The MD said government was aware of the BTCL’s concerns and was taking them under advisement. “The majority shareholder is all about further engagement,” Masunga said.

“We are the first government-owned entity to be listed and experience is the best teacher.

“They are aware of the situation and they are not saying they are not interested.

“They are saying at the right time, the right decision will be made. 

“This may not have been anticipated because we were trying out with BTCL, trying out a structure as the first, but with time, maybe some of these corrections will be made.

“By carrying on with the current structure, we are disadvantaging the same Batswana that this transaction wanted to empower because there’s no capital appreciation.

“Batswana should be winning on dividends and capital appreciation.”




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