Masunga on BTC gains from BOCRA Court victory
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Botswana Telecommunications Corporation (BTC) Managing Director, Anthony Masunga told stakeholders and BTC shareholders on Thursday that the home grown telecommunications company stands to benefit from the recent cross- mobile networks tariffs reduction by Botswana Communication Regulatory Authority (BOCRA).
Masunga made these remarks when presenting background on BTC’s financial performance for the year ended March 2018. According to the Megaleng House Captain the recent High Court decision to uphold BOCRA’s cross mobile network tariffs reduction could result in increased market share for his company’s mobile operation segment. Botswana telecommunications Corporation Limited (BTCL) and Orange Botswana were also cited as second and third respondent but they chose to be spectators in this regulatory dispute.
Masunga explained that the previous tariff arrangement for calls between different mobile networks only benefited mobile operators who already had a bigger market share. “We are relatively new in the mobile network operation space, only 10 years old, so before this reduction, what it meant was that people who were already on a certain mobile operator preferred to stay there. They also influenced their loved ones and associates to stay or switch to that particular operator in order to enjoy less tariffs within a network, and it made sense,” he said.
The BTC MD observed that this in turn closed out BTC which already had a small share in the market because of its new comer status. BTC is competing with two other operators who began the mobile telephony revolution in Botswana from 1998 onwards. Masunga highlighted that the new tariff rates have now opened a window for people to migrate and juggle across the mobile network space hence giving them an opportunity to convince a significant number of consumers into their exiting BTC –Live Connected fold.
“In these past years we have experience decline in mobile network subscriptions due to a number of reasons amongst others subdued economy hence decreased purchasing power of new millennial, however as experts have forecasted positive economic prospects we are ready to lure these new service consumers especially young people into our network, hence potential of increasing our market Share,” explained Masunga.
Botswana Telecommunication Corporation (BTC) market share in the mobile network was flat at 15 % since its inception as beMobile and has only risen to 16 % in 2016 after the company’s historic IPO and then reduced again to 15 % and has stayed flat since then. “These regulatory changes are disruptive to the trading environment, this means that there will be realignment in the consumer space and possible change of network operators giving us an opportunity to capitalize on that and increase our share in the market,” observed Masunga.
THE CASE AS PRESENTED AT COURT
Mascom Wireless Botswana recently lost with costs a case in which it had sought a review of the lawfulness of a directive promulgated by the Botswana Communications Regulatory Authority (BOCRA), to regulate the Mobile Termination Rates (MTRs) in Botswana. Mascom wireless says the rates as set by BOCRA are very low and wants them increased.
Many in the industry see Mascom’s bitter fight as an effort to protect the revenue it was making from Mobile Termination Rates (MTRs) since it has the largest subscriber based when compared to other operators. The directive sets out charges that mobile network operators charge each other for network interconnection. Botswana telecommunications Corporation Limited (BTCL) and Orange Botswana were also cited as second and third respondent but they chose to be spectators in this regulatory dispute.
Mascom wanted the court to determine if in issuing regulatory directive No1 of 2017 on the 24th March 2017, determining the charges that the mobile network operators have to charge each other for network interconnections, BOCRA had acted in accordance with its statutory obligations to take regulatory decisions in the open, transparent, accountable, proportionate and objective manner in terms of the Communications Regulatory Authority Act.
The mobile operator was also skeptical as to whether BOCRA acted duly in terms of its common law duty, arising under public administrative law, to act fairly and in accordance with the legitimate expectations it had created with the operators that it would, regarding the charges in case, complete the consultation process in which it was engaged with the operators. In essence Mascom Wireless is of the view that the directive that was issued by BOCRA is illegal, irrational, improper and wanted it reviewed and set aside.
But Judge Leburu noted that it is in the public interest that a consultation process must at some point come to an end so that certainty and predictability can prevail. He said the directive was issued for public good, particularly the reduction of MTRs rates as well as Off-net and On-net tariffs. “The decision by BOCRA, within the context of its decision making powers in my view, demonstrates that a reasonable and rational choice and decision was made by BOCRA.”
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Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.