Profits for the Botswana Stock Exchange Limited (BSEL) listed telecommunications giant, Botswana Telecommunications Corporation Limited (BTCL) tumbled 12 percent for the six months ending September 30 2018, driven by mounting pressure from competition.
The company, under the stewardship of Managing Director (MD) Anthony Masunga recorded a profit for the period, of P86million, a 12 percent decline from the P98million recorded in the same period the previous year. Total revenue declined by 11 percent to P704million from P794million in the prior period. Further, total costs declined by 11 percent to P619million from P697million in 2017, led by a 19 percent decline in administration expenses.
According to Masunga, the overall decline in revenue is mainly attributable to the challenges experienced in the mobile business.
“During the first quarter of the year (between April and June 2018), we experienced some teething problems relating to the migration of mobile customer accounts to the new converged billing system,” he revealed. The challenge meant that the problems encountered included compromised product performance, which led to compromised customer experience and partner (i.e. distribution channel) confidence. The Company also experienced delays in billing and launching new products. According to the BTCL boss, the above negatively impacted mobile revenues for the period. However, he said the challenges have since been resolved and that the company has been able to launch new innovative products and services such as Live Social and My Connek bundles and is now seeing an increased uptake of mobile data services.
“For the period under review, we also saw a switch in usage from voice and SMS to more data-centric usage in line with market trends. The mobile data usage increased by more than 100 percent from the same period last year, albeit from a low base and on lower margins compared to voice.”
Fixed voice remains a significant revenue contributor, though marginally down for the period. Fixed broadband remained flat compared to prior period. However, the company said it is seeing broadband growth in the residential segment in line with its strategy. Revenue and subscriber base increased by 12 percent and 13 percent respectively. BTCL also faces tough competition. Masunga admitted that competition continued to intensify, especially in the broadband space, putting downward pressure on profit margins. To cater for the increased demand for data services, BTCL said it will continue to make investments in enhancing the mobile and fixed broadband capabilities.
“We will expand the 4G and FTTx networks to reach over 400 and 114 sites respectively by the end of the financial year. These investments have already begun to bear fruit as our fixed and mobile broadband subscriber base increased by 13 percent and 9 percent respectively. “
The Company also saw an increase in the smartphone penetration on the network as customers continue to switch from basic phones to BTCL affordable 4G enabled devices in line with the company’s mobile data strategy. The overall mobile subscriber base increased by 4 percent. Further, BTCL also completed its organisational structure alignment exercise with the overall objective of building a customer centric and high-performance organisation, according to Masunga.