BTCL profits fall
Business
Botswana Telecommunications Limited (BTCL), Mr Paul Taylor
Botswana Telecommunications Corporation Limited’s yearly profit fell by more than 100% despite revenues slightly picking up. This is the company’s first loss in 4 years following an impairment exercise performed during the year 2016?.
The only listed telecommunication company in the Botswana Stock Exchange (BSE) reported a 0.4% increase in revenues on the back of increased sales of customer premises equipment which was the highest contributor registering a growth of 62%. Revenue from mobile was also impressive with a growth of 12%.
Highlighting the challenges facing the company, BTCL board through Daphne Matlakala, chairman of the board, and Paul Taylor, the outgoing managing director, said the revenues continue to be pressured by efforts of regulators (and governments) to continuously push down prices, as a way of driving universal access to telecommunication services. Furthermore they revealed that mature markets like Botswana face limited growth prospects, and entry of previously unrelated businesses into the Telco ecosystem, resulting in intensified competition.
The company’s loss after 4 years of profits comes about after the company failed to contain costs. According to the latest financial statements, total operating costs excluding impairment charge increased by 11% from Pula 1.345 billion to Pula 1.487 billion. The increase in costs was due to accelerated depreciation of network assets and an increase in mobile handset subsidy. The damage inflicted by the impairment exercise brought down the company’s total assets to P1.949 billion, resulting in a 19% decrease from the previous value.
“The loss for the year is at Pula 371 million. The loss was as a result of an impairment exercise performed during the year 2016. An impairment amount of Pula 522 million represents a write-down of some of property, plant and equipment due to technology changes which is in line with global trends,” read part of the company’s note to investors.
The company, however, managed to improve on its cashflow. The cash generated from operating activities was P257million, an upward tick of 5%. For the period under review the company scaled back on new investments as it only used P224 million in investing activities, reflecting a 5.6% decline. Meanwhile BTCL held back on any financing activity compared to the previous year where it spent P2.3 million.
“This resulted in an increase in cash and cash equivalents of Pula 33 million during the year. Cash and cash equivalents at the end of the year was Pula 390 million and its sufficient to finance operating requirements, anticipated capital expenditure and dividend payments,” revealed the company.
The leading telecommunications provider is bullish about the future as it hopes to post positive results going forward. BTCL projects to post profits in the region of P115 million in the 2017 financial year. The company says it will turn to improving its revenue streams through increased sales while at the same time containing costs. Moreover, revenue is expected to stabilise following huge price cuts and it will be boosted by the company’s focus on mobile and broadband (fixed and mobile) data services as avenues for continued growth in the short-to-long term. Botswana with the highest number of mobile penetrations in the world has provided a lucrative market for data services.
BTCL listing on the Botswana Stock Exchange (BSE) in April was preceded by a nationwide awareness campaign and ended with a record breaking number of domestic investors. BTCL which listed 1.05 billion issued securities ushered in more than 50000 citizen investors, prior to that there were only 28122 registered Central Securities Depository Accounts (CSD).The Company is a provider of communications solutions and services. BTCL’s principal activities include among others: fixed and mobile voice telephony, national and international internet, data services, directory services, virtual and private networks.
BTCL declared a final dividend of 5 thebe per share, payable to all shareholders registered in the books of the company at close of business on 15th July 2016. The company, which has a market capitalisation of P1.82 billion has had a tumultuous run on stock market. The company on the first day of trading closed atP1.30, an incredible 30% surge from P1. However, it the shares quickly retreated and briefly traded for around P1.20 until settling for the current P1.10 price, which is still a win to the shareholders as it represent a 10% premium on the initial P1 they paid during the Initial Public Offering(IPO).
Business
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.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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