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BTCL share price steadies

The Botswana Telecommunications Corporation Limited (BTCL) share price seems to have stabilised in the past two months following volatility in trading the stock.

The stabilization of the share price comes after the share price plunged from the highs of P1.34 to the current P0.85t, which is 15% lower than the Initial Public Offering price of P1.

The BTCL IPO was the most highly anticipated IPO of the year more especially that the IPO was postponed several times. In addition, the IPO was heavily marketed as a chance for citizens to grow their wealth through buying shares. Consequently the IPO was oversubscribed, bringing in as many as 50000 domestic investors. On the first day of trading, the stock price surged by 30% to P1.30, bringing joy to investors whom many of them were first time buyers.

Things began to unravel when BTCL declared a loss which was larger than expected, and the market reacted: there was a flurry of trading in the stock with the price taking a hit and ultimately falling to new lows of 91t. It was around that time, that the telecommunication company appointed the market maker as they had promised prior to listing. The telecommunication giant chose of the country’s leading stock brokers, Motswedi Securities, to play the part.

Mr. Garry Juma, Head of Research at Motswedi Securities, says the listing of BTCL was met with great excitement from investors. “There was lots of buying especially from those investors who missed out during the IPO.” Mr. Juma went on to say that after BTCL released its financials which showed a loss, the market reacted negatively despite prior warning from BTCL contained in their IPO prospectus that the corporation will incur a once off impairment charge.

Perhaps it was the larger than expected loss that rattled the investors as evidenced by how quickly the share price fell in the usually slow to react stock exchange.

“There was panic selling. Some investors were selling at any price. Unfortunately because of the demand side which was low, we had a market in which there were many sellers but not many buyers, creating a mismatch which pushed the price down to current levels,” Mr. Juma said.

With  the share price at 0.85t, representing a 20% discount of the IPO price, Mr Juma says real investors who know the value of shares see BTCL as a sitting duck as the share price is low therefore creating opportunities. Furthermore, he said it is expected that BTCL will put on a good performance when they announce their interim results later this year.

“So investors are now seeing value. We are also seeing lots of buying from participants. As a market maker we have not participated much because our role is only to interfere as the last resort to avoid a mismatch between sellers and buyers.”

While the share price has not moved in two months, the stock continues to be traded frequently. Mr Juma puts the stabilization of the share price to investors finally coming around and realising value of the stock. This is evidenced by the bid-ask spread which does not deviate much from the current 0.85t price. Moreover, some sellers are not willing to sell below the IPO price. “We can say the share price is now in equilibrium, that’s why the stock could be traded frequently without affecting its share price. The investors are seeing beyond short term fluctuations; instead they are focusing on the long term investment horizon period.

BTCL remains a good company which has no leverage and debts hence it can finance expansion through internal operations.”

The trajectory of BTCL on the stock market closely mirrors that of another listed local company Cresta Marakanelo which listed under similar circumstances: when the government decided to reduce its stake by selling it to citizens. The company listed on the BSE in 2010 after Botswana Development Corporation (wholly owned by the government), the main shareholder, put up 62.9 million shares in an Initial Public Offering (IPO). The IPO was made up of 40.7 million shares offered to the public at P1.45 per share, while 18.5 million was sold through private placement. 

The remaining 3.7 million was bought by the company on behalf of its employees. The IPO which was 94% subscribed managed to raise P55.4 million, a record for the BSE at that time which has now been usurped by BTCL. Like BTCL, after listing the stock price fell below the IPO price and this was partly blamed on first time investors. The stock which is currently trading below its IPO price has been gaining momentum this year, with the share price appreciating by 21.5% to trade at P1.30, making Cresta the best performing stock so far in the BSE’s domestic company index.

The gain in share price follows an impressive run that began in 2015 when the company’s share price went up by 20%.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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Global CEOs Back Plan to Unlock $3.4 Trillion Potential of Africa Free Trade Area

23rd January 2023

African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.

The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.

To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”

Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.

The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.

“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.

“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.

The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

About the World Economic Forum Annual Meeting 2023

The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,

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