- Says share price would grow because of increased demand
- Notes restrictions serve a purpose at IPO stage
The Botswana Stock Exchange says it has advised the government to remove restrictions on Botswana Telecommunication Limited (BTC) shares for the reason that they inhibit growth of the share price because of the same thinking.
“The share price will never grow, there is no diversity in terms of the views,” the CEO of the BSE, Thapelo Tsheole said this week at the launch of the BSE’s 2022-2026 strategy. “The government wrote back to say it was a cabinet decision and they will look into it,” he told journalists. “When we say a market, we mean a place where diverse people with diverse views can actually come into play.”
The BSE strongly believes that the share price of BTC will remain flat because there is not much demand for them even if BTC makes a profit. No matter the amount of the profit, Tsheole noted, the thinking is still the same. In the CEO’s expert view, it is good to impose restrictions only at the IPO level; post-IPO and after several years, the incentive evaporates. Infact, the longer this goes on, the greater the suppression of the share price.
Tsheole’s greatest fear is that if another telecommunications company entered the market while Batswana are still holding BTC shares, the share price would go down. “So what we were proposing to government is that we need diversity in terms of views or opinions towards BTC,” he said. “They need to relax it to remove foreign restrictions. This is based on evidence across many markets where initially shares are limited to citizens and then over a period of time that restriction is removed.”
Removing the restrictions would actually benefit Batswana who own BTC shares because demand for the shares would grow and lead to growth in the share price, says Tsheole. Government can still remain with 51 percent but the BSE argues that for the 49 percent, they should let the market determine the dynamics so that “you get an efficient price discovery,” Tsheole said. “We don’t know whether it will be up or down but what I want you to know is that it would be more liquid like other telco shares.”
