BTC public shares due next year

Staff Writer | Friday October 15, 2010 00:00

 

The offer of shares in the privatised BTC is eagerly-awaited in a market bereft of investment opportunities, particularly the high-return, low-risk variety offered the telecommunications giant.

Earlier this year, citizen investors were left ruing missed opportunities when a group of Orange citizen shareholders collectively pocketed P420 million through a 20 percent share buy-back by the mobile phone company's majority shareholder, France Telecom.

With BTC currently enjoying a monopoly in the fixed line sector and its mobile wing, beMobile, increasing its share of the market, Batswana and other investors are unwilling to be caught napping in the expected stampede for shares.

Recently, BTC announced that its privatisation model involved government retaining a 51 percent equity in the telecoms company and the remainder being divided between members of the public and BTC employees.

This week, PEEPA CEO, Kgotla Ramaphane, said numerous processes and stakeholders would be involved ahead of the listing of public shares in BTC. He said as the project manager, PEEPA was eyeing the end of the financial year for a clearer picture on the floating of BTC shares.

'The process involves the appointment of advisers for the IPO and many other stakeholders, as well as discussions,' he said. 'We are working towards the end of the financial year, which is March 2011. At this time, we should know the date for the IPO. However, there's a lot of groundwork and further discussions to be had before we can arrive there.'

Processes and discussions involve the quantum and price of shares to be made available to the public and the listing requirements for the Botswana Stock Exchange.

BTC spokesperson Anno Tsie told Business Week that discussions between BTC, PEEPA and the government were ongoing on the amount of shares to be set aside for current and future employees of the telecommunications company.

'Our chairman recently said Government had decided that the privatisation would proceed with 49 percent of the company being sold off in shares and out of that, there would be some for BTC workers,' she said.  'What that percentage is was not defined at the time. The privatisation master plan does provide for a percentage of shares to be set aside for workers. Discussions are ongoing about this, but to discuss timelines would be to speak out of turn. PEEPA are the project managers and they are implementing the privatisation.' BTC's original privatisation model had envisaged five percent of the company's shares going to employees. Tsie said the two BTC unions would be involved in the discussions at every step. 'The unions are updated and management has communicated with them to say feedback is pending from PEEPA,' she said.

'We have told them that at the moment, we don't have a lot of information and we are waiting for PEEPA to move ahead with the project. There's nothing that will be signed off without the union's involvement.'

Meanwhile, BTC's new privatisation model has come under scrutiny as it appears to leave the state in control of the privatised company. Under the original 2006 model, between 40 and 49 percent of BTC would be sold to a strategic equity partner, five percent to employees and the balance to the government, which would float the shares.

Local economist, Keith Jefferis, says the thrust of the new privatisation model is unclear. 'While much depends on the long-term intentions for the state-owned portion, this model clearly only represents a partial privatisation with Government retaining control, which to me does not seem to reap the benefits of privatisation,' he says. 'The whole point is to bring in the private sector to run it as a commercial entity. With the government holding 51 percent, it could be run as a government-owned entity. From what I understand, the original proposal to bring in a strategic partner and have Government float the shares made more sense. But again, I don't know the reasons for the change.'

Jefferis says the new model seems to contradict the government's previously announced policy of reducing its borrowing to parastatals. 'However, I believe BTC, even as a state-owned company, will be able to access financing,' he says.

'It's large enough to access funding for itself regardless of the ownership model and banks would be more than willing to lend to it.'

 Privatisation of BTC has been facilitated by the Botswana Telecommunications Corporation Transition Bill, which has enabled the establishment of BTC as a public company under the Company Act.

Under the law, the Minister of Transport and Communications can acquire, hold, dispose of and otherwise deal with the financial interest of the government in the company and enter into any agreement or arrangement necessary or incidental to any activity mentioned in the Act.