BULLISH BTCL LEADS DOMESTIC TRADERS

BULLISH BTCL LEADS DOMESTIC TRADERS

The sole listed telecommunications outfit, Botswana Telecommunications Corporation Limited (BTCL) continues to outshine listed companies on the Domestic Companies Index (DCI) and its share price has bubbled 46.9 percent year-to-date (YTD), a week after it posted huge profit.

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• Share price jumps 47% YTD
• CEO buoyant on prospects
• Profits on the rise
• Investors salivate for a piece of BTCL

The sole listed telecommunications outfit, Botswana Telecommunications Corporation Limited (BTCL) continues to outshine listed companies on the Domestic Companies Index (DCI) and its share price has bubbled 46.9 percent year-to-date (YTD), a week after it posted huge profit.

By close of Wednesday business day, share price of the mobile phone giant gained 2 thebe to close the day trading at P1.44 thebe, bringing its gains to 46.9 percent YTD. At Motswedi Securities, Capital market analyst, Moemedi Mosele expects BTCL’s aggression to continue. He said that BTCL’s recent bounce to profitability was a seduction to investors, now everyone wants a piece of the BTCL stock.

For the year ended 31st March 2017, BTCL revenue grew 8 percent, and consequently profits for the year ballooned to P237 million, compared to a prior loss of P371 million. Mosele said that it is attractive to investors that BTCL has managed to reduce their operational costs, which shows that going forward the company can contain its spending. For the period under review, costs decreased by 26 percent to P1.401billion from P1.883billion spent during the previous corresponding period.

As a result of its colorful performance, Mosele said investor skepticism has now turned to optimism and demand for the BTCL shares. The market watcher expects BTCL to gain about 10 thebe more in a short term, driven solely by demand. Mosele does not see BTCL making losses any time soon which, he said will keep BTCL share price liquid. As a new entrant on the domestic bourse BTCL according to the analyst, still has an allowance for growth of the share price, which makes the stock attractive and profitable going forward.

Botswana Communications Regulatory Authority (BOCRA) has asked all mobile phone companies to reduce their Mobile Termination Rate from 29 Thebe, to 22 Thebe. Furthermore, there is to be a further reduction from 22 thebe to 13 thebe by 1st June 2018. The regulator also instructed further reductions, demanding that the companies commence a decrease their Off Net Premium On Off mobile voice calls towards 1st June 2018. Telecommunications experts were of the view that the reduction will obviously squeeze profit margins of mobile companies inclusive of BTCL. Mosele agrees that there will be a slight compression, but he says that it will not lead to any losses. “It will be a marginal compression,” he opined.

According to Mosele, BTCL needs to be more aggressive in the market to push for increased subscriptions and introduce more innovative products in order to compete. The company to him is still a bit conservative and still has a parastatal mentality. BTCL is always the last to introduce innovative products. As an example Mosele indicated that it was the last to launch 4G internet.

Meanwhile, Letshego, the behemoth micro-finance firm, led trading volumes for a third consecutive day, and has found some stability at P2.14 thebe per share after slipping 2.3 percent lower over the previous week. Chobe retreated by a thebe to close at P8.35.

Further, Stanchart closed the day 1.7 percent lower, extending year to date losses to 20 percent after 500 000 shares traded 11 thebe lower, closing at P6.20. The Bank recently revealed that the search for a CEO continues, and that the CFO, Mpho Masupe is at the helm of the country’s oldest bank, as acting CEO.

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In his generation Newel is one of the most recognisable names in Business journalism. A recent finalist in Media Institute of Southern Africa Media Awards, Newel has written extensively in the boardroom dynamics around public pension funds and related investment interests. His areas of interest are companies and markets, including the financial reports of major companies in the country. Currently he is pursuing the developments around the management contracts for one of Africa’s most lucrative Public Pension Fund, the Botswana Public Officers Public Funds.