Monday, December 11, 2006

Botswana Telecomm's Privatization to Commence Soon

Even in Africa, telecommunications companies face increasingly stiff competition and a tougher regulatory environment. Case in point is South Africa’s Telkom.

Investors who haven’t given up the sector entirely, however, may just want to keep an eye on Botswana Telecommunications Company (BTC). The firm is due to be privatized next year, and we may eventually see some shares (25-30%) offered to the public.

BTC’s income rose nearly 18% this past year on a 7.4% revenue increase. Over the past few years it has posted an ROE above 16% and an ROA above 10%. It currently boasts about 130,000 line connections and is aggressively pursuing DSL customers.

The first stage of BTC’s privatization will see a private partner assume a 40-49% stake in the company. This will happen in the first quarter of 2007. It’s not yet known whom this partner might be, but Telkom and Germany’s Vnet are rumored to be interested.

BTC may find the post-privatization landscape rather more challenging than the existing one. Competitors will be allowed enter the market almost immediately after the privatization is complete. And I anticipate that competition over the DSL market will be fierce.

At the right price, however, BTC could make for an attractive asset. We’ll keep you posted on any news of shares hitting the Botswana Stock Exchange.

www.investinginafrica.net

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