There has been much fanfare around the upcoming BTCL IPO as the long awaited privatization takes place. Already scores of Batswana have already flocked to Barclays bank to acquire application forms to subscribe for the shares. A very good initiative indeed as its one of those rarest moments where a parastatal has gone private and offered a piece of its entity to the citizens.
The current status quo sees other MNOs, the MTN controlled Mascom (brain child of Strive the billionaire philanthropist who owns Econet) and the first mover Orange Botswana. These duo are still private moreso on the advent of them being multinational.
Now one may ponder, the question that is being asked repeatedly: is it worth investing in BTC?
The same answer always is yes and no. Yes for those who base the analysis on the growth prospects of the company and the potential it might unleash. For example had the BOFINET still been asubsidiary it could have been a competitive advantage(for FTTx), however only and only if strategic measures are put into place and implemented. The other foreseeable reason could be if the IPO is oversubscribed (a somewhat weak signal in most cases as it means a higher price could have been charged)) and thus insitutioanl investor stand to make more on capital gains. The answer Yes can stem for the purely patriotic at heart and those whom the slogan - "ke ya rona rotlhe" identifies and resonates well with them.
The No answer come into light when does a thorough fundamental analysis. On the prospectus BTC is forecasting losses for the first year. Even the subsequent years, the profit margin is not convincing for an investor to put all their monies in there. The other No can come from the weak scenario analysis. The prospectus lists risks that may arise during the operation of BTC. The mitigation factors are not enough to convince a fully fledged investor as they look like they come from textbook example. The most discouraging factor will have to be the current service standard. Throughout social media and word of mouth customers are not overly impressed with the service that BTC offers. This is a wake up call to say that should the service standards improve one could hope that it translates to more efficiency and productivity
For smaller investors volume is the key indicator as this means they can gain when the stock price moves. For bigger and institutional investors more emphasis will be on value. This occurs because institutional investors place money from insurance premiums, pension benefits and therefore cannot afford to have capital losses. For the controlling entity (Government of Botswana's stake is 51%) the mandatory dividend still holds.
Speaking of dividends, let us foray briefly into the value vs growth investing. The bonafide guru of investing Warren Buffet refutes this comparison and says it's absurd. One should invest for value as the his famous quote states - price is what you pay and value is what you get. Given the Berkshire Hathaway has not paid dividends and it's share price is US$191,395.98 (BRK.A) the man might be onto something. The advent of not paying dividends causes two things - the share price is not
eroded and the retained earnings are not slashed by the dividend payout ratio. When placing money into shares, investors are looking for growth which in turn translates to value.
That is unless a calamitous event takes place and everything nose dives taking the value with it.The BSE has come a
long way and this is one of the landmark events when the IPO goes off on the 11th . It will be very interesting to see the
opening price and trading volumes. Also maybe it's high time BSE experiments with derivatives even though the
the current trading patterns do not warrant for such.
All in all it comes down to subjectivity of investing vs objectivity. For now all eyes are on BTC, Barclays and BSE
to see how the whole process plays out.
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