Botswana Telecommunications Corporation Limited (BTCL) recorded a large loss on its maiden results as a public company and blamed it on a number of factors including subsidies by governments as a mandate for universal access.
The results that will dampen the mood of local investors who bought the stock when the telecommunications company listed on the Botswana Stock Exchange (BSE) in pomp earlier this year saw its topline wiped out by an impairment exercise performed during the year 2016.
According to BTCL’s Audited Annual Financial Statements for the Year Ended 31 March 2016, in 2015/16 total revenue rose to P1.512 billion from P1.506 billion in the previous year, reflecting an increase of 0.4%. Sale of customer premises equipment was the highest contributor registering a growth of 62%.
However, it recorded P371 million losses for the year. “Revenue from mobile was also impressive with a growth of 12%. Total operating costs excluding impairment charge increased by 11% from Pula 1.345 billion to Pula 1.487 billion,” said the group by Paul Taylor, who is on his way out.
“The increase in costs was due to accelerated depreciation of network assets and an increase in mobile handset subsidy. The loss for the year is at Pula 371 million,” it added.
According to BTCL, the loss was as a result of an impairment exercise performed during the year 2016. An impairment amount of P522 million represents a write-down of some of property, plant and equipment due to technology changes which is in line with global trends.
Total assets declined from P2.404 billion to P1.949 billion following the impairment of property, plant and equipment amounting to Pula 522 million. The company continues to remain cash positive. The cash generated from operating activities was P257million and the cash flow used in investing activities was P224 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.”
BTCL added that the Global Telco 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. “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 fixed and wholesale revenue are expected to stabilise following the slowing down of the recent huge price decreases. Mobile and broadband (fixed and mobile) data services are expected to continue to anchor growth in the short-to-long term. The company has embraced the need to stringently manage costs, as revenue growth continues to come under pressure, so as to sustain profitability levels.
BTCL’s principal activities include among others: fixed and mobile voice telephony, national and international internet, data services, directory services, virtual and private networks.
Anthony Masunga will succeed Taylor, in an acting capacity, as Managing Director until further notice. Masunga is currently the Chief Operating Officer at BTCL. Taylor is leaving the group on 19th July 2016.