How BTCL share price crumbled in 2018

  • Share Price declined 48.4 percent
  • Sells at P0.95, below IPO price
  • BTCL only outperformed troubled Choppies


Share price of the listed telecommunications giant, Botswana Telecommunications Corporation Limited (BTCL) emerged as one of the biggest losers in 2018, taking down with it, the company’s market capitalization, brokerage firm Motswedi Securities has revealed.

The year 2018 was very heavy for the BTCL stock, as it closed 2018 as one of the biggest nonperforming stocks of all those listed on the Botswana Stock Exchange Limited (BSEL), with a year to date loss of 48.4 percent and a closing price of 95 thebe. According to Garry Juma, Head of Research at Motswedi, the stock only beat out a single counter on the domestic board in terms of performance, which was the troubled retail giant Choppies Enterprises Limited, which at the time of its suspension was at a year to date loss of 71.5 percent.

The year 2018, was generally a bad one for the local exchange at large, with only 7 counters out of the 26 that are listed on the domestic board marking positive growth and the rest (19) either not showing any growth or reversing their growth. BTCL recorded losses in all but 2 months for the year – May and October, where strong demand for the stock drove it to a month-on-month growth of 22.5 percent and 6.5 percent respectively.

According to Motswedi Securities analysts, BTCL’s month-on-month share price growth in 2018 was in complete contrast to the year prior, where the stock actually closed the year as the top gainer of the year at 87.8 percent.

“The stock’s steady decline throughout the year stemmed from a myriad of events – beginning with investors in the first quarter cashing in their 2017/18 half year gains as well as discarding their positions after ensuring they’ve qualified for the dividend. This led to a supply influx of the stock, which by far exceeded the demand, thereby resulting in the stock’s largest monthly loss of the year in March,” Juma said, alongside his colleague Salome Makgatlhe.

The Motswedi analysts further said BTCL’s slight recovery took two months (April and May) driven by the sheer attractiveness of the price – from 102 thebe at the start of May to 130 thebe by mid-June.

“When the 2018 Full Year financial results were published at the end of June and showed a decline in profitability, the stock nosedived once more only to be saved yet again by the attractive price, to give the stock its second positive recording in October.”

The last few months of the year were shrouded with uncertainty in anticipation of the company’s  2019 Half Year results, which were shattered when the company put out a trading statement that its performance was lower than the prior period. BTCL closed the year with a 12 month range of between 94 thebe and its 2018 opening price of 185 thebe, with the stock closing off at 95 thebe.

The company’s dividend yield was the strongest at 13.1 percent, which was a possible reason why investors kept coming back for the stock despite the price’s roller coaster ride. It was supported by a dividend policy of between 50 percent and 65 percent of their earnings after tax subject to the financial position of the company, the investment strategy among other factors the board would put for consideration. The company has a twelve month trailing Earnings Per Share (EPS) of 19.52 thebe and boasts a PE ratio of 4.9 times making it  one of the cheaper investments to buy into on the exchange.