Countless Batswana who scrambled to get their hands on the Botswana Telecommunications Corporation Limited- BTCL shares will heave a collective sigh of relief to learn that following a decidedly rocky start, its share price has finally stabilised.
Mere weeks after the initial public offering (IPO) was launched, BTCL shares staggered and ultimately plummeted to below the opening price of P1 per share. Naturally, this struck fear and panic among shareholders to the point where some moved swiftly to try and dispose of them. The situation has, however, apparently changed for the better as the shares are now doing well on the market.
BTCL’s Public Relations Manager, Mr Golekanye Molapisi (pictured) attributes this to investor confidence in their stock.
“In our view, the appreciation of the BTC share price on the Botswana Stock Exchange is validation or a sign of confidence investors have in our stock,” he said in an interview recently.
As of May 17, BTCL’s share price has reached a high of P132 per share. Further to this, the share cost was P128 at the close of business on June 16, according to information from the Botswana Stock Exchange-BSE. However, Economics expert, Mr Ishmael Radikoko (pictured below), explained that the increase or decrease in share price is controlled by demand and supply, which in turn hinges upon many other factors. Radikoko, a lecturer at the University of Botswana, said in the current scenario, it’s obvious that demand for the shares exceeded supply. This increase in demand, he explained, could be attributed to the fact that the dust has now settled in regards to the uncertainty of where the company is headed.
“First, we have seen the reshuffle in the top management team, where there was the appointment of the new CEO, Mr Anthony Masunga after Mr Paul Tailor’s departure. Ms Lorato Boakgomo-Ntakhwana also replaced Ms Daphne Matlakala as the chairperson of the board, whose deputy is Mr Gerald Nthebolang,” said Mr Radikoko.
He said there was a new addition to the Board, being Mr Maclean Letswiti. According to Mr Radikoko, these changes to the management team likely injected a sense of confidence in the market and as such, hiked the company share price.
Secondly, he noted that confidence in the market improved when the company announced positive interim results. The results indicated the P371 million losses in the last financial year ended 31 March were as a result of increased company expenditure stemming from the impairment of company assets being reversed.
To add to this positive news, Mr Radikoko said earlier this year the company released a cautionary statement that revealed that the annual profits would be positive and even higher than what was anticipated, as shown in the company’s listing prospectus. According to Radikoko, the appointment of a market maker as a buyer and seller also helped in terms of improving the liquidity of the shares, although it could not be said the liquidly problem was no longer existent.
“The improvement in the liquidity of the share was also helping in true price discovery of the shares; so that ultimately, the share would trade at a more efficient true intrinsic value, which consensus estimates have put around P2 per share,” he explained.
With regards to the share price sustaining the appreciation trend going forward, he said;
“If they remain positive, then demand for the shares and hence their price will continue to appreciate going forward and head to its true intrinsic value of around P2.”
He further said BTCL being the first local telecommunication company to list on the BSE has a positive impact in terms of the volumes of shares which were bought, especially at the IPO stage, which led to oversubscription. Radikoko said this was in part due to the government’s aggressive marketing but investors were also looking to diversify their portfolios with a techno stock.
“As we know, nowadays many people are interested in technology, so portfolio managers believe that including technology stocks in their portfolios could boost their portfolio performance and as such, the BTCL listing was a welcome development,” he said.