Botswana Telecommunications Corporation Limited’s (BTCL) share price has this week reached its nadir since first being floated on the Botswana Stock Exchange in April of this year.
As of market close at print time, the stock had plummeted to P0.90 per share, signifying a 10 thebe loss for investors who purchased their shares on the primary market.
The nose dive in the corporation’s stock makes it the 2nd joint lowest valued shares on the domestic equity market – level with Furnmart also priced at P0.90.
The only stock valued less is that of Olympic which registers at a paltry P0.20.
The corporation’s unprecedented record lows on the stock exchange comes as a surprise to a multitude of investors – many of them low income earners not well versed in the intricacies of share price fluctuations.
Their disbelief is generally attributed to the fact that a fair amount of them were galvanised to invest by a vigorous investment campaign that would eventually set local Initial Public Offering (IPO) records as a consequence of its over-subscription.
So robust was the investment campaign that it encompassed all media format, from print to digital, with the most persuasive investment campaign strategy being a public lecture held at the business faculty of the University of Botswana on the 29th of February.
The lecture aptly titled “Public Lecture on The Botswana Telecommunications Corporation Limited Share Initial Public Offering” featured a myriad of BTCL representatives along with economics and finance professors at the University of Botswana.
What stands out most about the lecture was that Managing Director of BTCL at the time, Paul Taylor, detailed a key investment factor as;
“A solid track record of financial sustainability within the company [BTCL] and a clear strategy with an unrelenting focus on delivery.”
This perhaps should have set off the first alarm bells for at the same gathering, esteemed finance lecturer at UB, Ishmael Radikoko, expressed a contrary opinion.
“The growth strategy of the company in the prospectus is not very clear or is thinly disclosed and strong competition in the mobile sector may lead to potential growth being short-lived” he said, right after voicing concerns pertinent to the corporation’s liquidity.
Fast forward 5 months and Radikoko’s assertions seem to be accurate – at least for now.
When The Voice probed acting Managing Director of BTCL, Anthony Masunga, this week on how the company was valued before the IPO and its current liquidity he said;
“They were using what was called DCF (discounted cash flow) method of valuation. This is typically used purely for the reason that once a business has got cash, it is able to meet its obligations should they declare dividends. You may have assets within your books that do not necessarily generate revenue so it is important to use the discounted cash flow method.”
In regards to the plummeting share price of the company, he attributed it to desperate sellers offloading their stock at extortionately low prices and that the stock market was not an adequate indicator of the future of the business will look like.
He further noted that he himself is a shareholder and advised Batswana not to sell for three reasons.
“The company just declared a dividend of 5 thebe over the shares that I bought at P1. That represents a 5% growth within 3 months. Secondly, I believe in BTCL’s strategy going forward and that’s where the value sits in terms of BTCL. Thirdly, when you read what’s in the prospectus – the company is going to declare profits in the coming year so the future is quite bright for the business”