PEEPA forecasts strong BTC IPO

Keikantse Lesemela | Friday February 21, 2014 16:42

According to the agency, the IPO will be open to both citizens and citizen-owned organisations, although allocations between the two classes of investors are yet to be decided upon. The latest developments follow Cabinet approval of BTCL’s privatisation four years ago with up to 49% due to citizens and citizen companies, while up to 5 percent will remain strictly for BTC citizen employees.

On Wednesday, PEEPA CEO, Kgotla Ramaphane told BusinessWeek that the agency expected positive market response to the IPO, gauging by the robust public interest in the share sale ever since plans for it were made public in 2010.

Recently, a former PEEPA CEO, Joshua Galeforolwe poured water on the privatisation process, saying the removal of BTCL’s infrastructural backbone had dampened the organisation’s profitability going forward. The backbone is now owned and operated by a state-owned firm, Botswana Fibre Networks (BOFInet).

“I will base my comment on the telecommunications industry,” Ramaphane told BusinessWeek.

“BTCL operates in different sub-sectors of the industry, being fixed line, mobile and internet and for me, that places it in a position to be competitive.

“Secondly, their CEO recently stated they foresee growth in their strategy going forward. That’s the assurance and we are positive that BTCL will be attractive when it is privatised.

“We believe there is commitment given the management in place and the initiatives undertaken. The responses to the IPO have also revealed strong interest.”

“We have started all the activities that have to take place in order to launch the IPO in August,” he said.

“Some of the processes cannot be shared with you right now due to market sensitivity.”

Ramaphane added that the privatisation agency did not foresee any complications with listing the BTCL privatised shares on the BSE with a stipulation that they may only be traded in by citizens. In the road to the IPO, experts had cautioned that the BSE had no mechanisms to dictate which investors bought public shares, while others had questioned how the exchange would prevent one powerful investor from snapping up every available share and thus reversing the privatisation objectives.

Last year, senior government officials said these challenges would be navigated through the use of a market maker in the form of the Botswana Privatisation Assets Holdings (BPAH). The state owned organisation would allow the trading of shares among citizens, although critics have said this will also limit the BSE’s price recovery process.

“We do not foresee a problem with the trading of the shares among Batswana,” he said. “The BSE has the infrastructure to handle the task given to it.” Government has said the privatisation of BTCL creates an opportunity to facilitate development and deepening of capital market and also serve as an opportunity to strengthen managerial capabilities at BTC. Besides citizen empowerment, another key consideration in privatising the Corporation was to reduce government’s financial and operational commitment in the telecommunication sector.