Dbt BTC adopts cost reduction programme * Eager to upscale customers to 4G * Company in a pole position for 4IR
Botswana Telecommunications Limited (BTC) has announced a plan to undertake a structural cost reduction programme enabled by digital transformation and automation in order to drive Earnings Before Interest, Tax Depreciation and Amortisation (EBITDA) growth. In its financial results for the year that ended 31 March 2020, BTC says e¬fforts to improve free cash flow will be supported by expansion in EBITDA margins with the benefit of reduction in operating expenditure, focused working capital management and disciplined capital investment. The telecommunications company has reported a decline in profits that are lower than the prior year. In the period under review, BTC registered a profit before tax of P127 million, which is a decline of 35 percent compared with P197 million reported in the previous year.
The company, which has P2.4 billion worth of assets, says it will continue to focus on leveraging its network investments to build digital solutions that enable businesses to operate and keep people connected. The results state that an opportunity exists to increase share in the data consumption arena, in particular upscaling customers to 4G platforms to lessen impact of headwinds in voice performance. “The fixed and mobile networks will continue to provide a superior customer experience as we create seamless services using a combination of fixed broadband and wireless technologies to meet customer needs in homes, vo¬ices and on the go,” says Managing Director, Anthony Masunga.
He hails recent investments in fixed and mobile broadband for putting BTC in a pole position for the next phase of growth by di¬fferentiation through reliability, speed and coverage, thus laying a foundation for the Fourth Industrial Revolution. Masunga says the overall decline in revenue from contracts with customers of 4 percent was as a result of a shortfall in voice revenues for both fixed and mobile in the later part of the year. But in the midst of this, broadband services grew by double digits, reflecting superior fixed and mobile data network performance offerings to customers through reliability, speed and coverage. According to the results, this followed completion of the rollout of major capital projects such as Data Centre, Fixed Broadband and Mobile broadband (4G).
However, the results note that these investments also led to an increase in depreciation on network assets. Coupled with depreciation of right of use assets, cost of services and goods sold increased by 7 percent, leading to gross profit slowing down to 11 percent below prior year. With the revenue decline of 4 percent, EBITDA was only 2 percent down, reflecting the continued focus on cost containment to protect margins in the face of subdued revenues. Selling and Distribution costs, Administrative and Other Expenses are reported to have fallen below prior year by 32 percent, 3 percent and 6 percent respectively.
The results state that the latest economic estimates are indicating economic contraction as opposed to pre-COVID-19 growth of 4.4 percent for Botswana and 3.3 percent for global growth. Masunga says BTC continues to monitor developments related to the COVID-19 pandemic, including government requirements and recommendations to evaluate possible extensions to all or part of such recommendations and product offerings.