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BTCL IPO: Is it a good investment?

As has been mentioned in various media platforms that the government of Botswana will be selling 49% of its Botswana Telecommunication Corporation Limited (BTCL) share to the public, through an initial public offering, of which 5 percent has been reserved for BTCL employees.

This implies that the government of Botswana will retain 51% of the shares and therefore become the major shareholder of the BTCL.

Over the past weeks a number of people have asked me the following questions: What is your take with regard to the BTCL selling of shares? Should I buy, Is it a good investment? How much should I invest? Hence the aim of this article is to answer the above mentioned questions. Allow me to start by quoting the following:

“The stock market is filled with individuals who know the price of everything, but the value of nothing” Phillip Fisher.  “How many millionaires do you know who have become wealthy by investing in saving accounts? I rest my case” Robert G. Allen. Though investing in a saving account is a sure bet, your gains will be minimal given the extremely low interest rates. But don’t forgo one completely. A saving account is a reliable place for an emergency fund, whereas a market investment is not.

Nothing is certain in this world but what one needs to do when investing is to take calculated risks. What are the implications of investing in the BTCL shares?

As already mentioned above: most people tend to invest in stock market by virtue of only knowing the price of the stock without really taking time to research and understand the market. So let me start by taking you through the evolution of the Botswana telecommunication market, of which I believe afterwards you will be able to make the right decision with regards to whether you should invest and how much you should invest.

The BTCL is the first operator to establish in Botswana, providing only the fixed telephony services. The liberalisation of the Botswana telecommunication market took place in 1998, when Mascom Wireless and Vista (now Orange) were given 15 year licences by the Botswana Telecommunication Authority (Now Botswana Communication Regulatory Authority (BOCRA)).

The licensing structure was such that the two newly licenced operators could only provide mobile telephony technologies while they only provided the fixed telephony services. The mobile diffusion within the country leapfrogged the fixed telephone services hence the BTC (which monopolised the fixed line and wholesale services (telephone infrastructure)) started making loses.

In 2007, BOCRA (then BTA), introduced a service neutral licensing regime, giving the three operators an opportunity to provide both fixed-line services and mobile services. Furthermore, all operators were allowed to develop their own infrastructure hence technically ending the BTC monopoly on wholesale services and fixed-line services. The new licensing regime had two important effects on the telecommunication market. First it gave the BTC a new life since the introduction of the mobile arm of the BTC,   beMOBILE improved financial standing of the company. Secondly the introduction of the third operator in the mobile market improved competition, hence improving the

welfare of the consumer.

Though Mascom wireless continues to dominate the mobile market share, over the past eight years beMOBILE has gained a lot of market share from both Mascom Wireless and Orange Botswana to become one of the fastest growing network (from a lower base) in terms of subscription while the other two lost some shares or stayed constant. As of 2014, the BTC mobile network (beMOBILE) market share stood at 15% higher a one percent increase from 2013, while Mascom market share was constant at 53% as compared to 2013 rates. Orange Botswana lost one percent in 2014, and its market share stood at 32%.

This is where you need to pay attention to details. What does selling of shares to the public imply for the BTCL? In a nutshell it implies that Batswana will gain ownership of the BTCL. And who are these people who own BTCL? They are the subscribers, the consumers of the telecommunication product. Climax of my story: For BTCL to do well in this market it therefore implies that those who buy the BTCL shares thus becoming the owners of the company must start buying the product of their own company.  Hence this will improve the market share of the company.

The performance of the BTCL shares will depend on where the new owners (Batswana) are going to spend their money in terms of telecommunication services. At the same time I am of the belief that the BTCL marketing department which seems to be sleeping must wake up and use this to gain more market share by simply educating Batswana about this initiative. This initiative gives the BTCL an easy opportunity of improving its mobile market share while at the same time enriching Batswana.

Of particular importance is to note that the mobile market is currently migrating from the voice services to over the top services (OTT), which requires high speed broadband networks and therefore with the right technical qualities the BTCL stand a better chance to do well as it has easy access to backbone infrastructure.

It is also important to note that, just like Letshego and Choppies, the BTCL is at a better chance to conquer the African telecommunication market. Looking at the infrastructure and the backing from BoFiNet, BTCL stand a high chance to enter markets of the neighbouring countries such as Namibia, Zambia and Zimbabwe. In conclusion, the performance of the BTCL which will ultimately affect its share prices is totally dependent on its market share which is a decision that totally lies on Batswana who will soon be buying stakes of the company. So the answer on whether to buy the BTCL shares and how much to invest lies on you.


Mokobi is a University of Cape Town PhD Student, Economics of Regulation and Competition

Opinion & Analysis



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