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  • BOTSWANA TELECOMMUNICATIONS

    CORPORATION ANNUAL REPORT 2009

  • timelinesbOTswANA TELEcOmmUNicATiONs cORPORATiON

    1999BTC Group records an all time high profit of Pula 75.0 million. BTC Group enters into interconnect and backhaul network agreement with mobile operators. Customer connections increased to 144 195 lines.

    2001Despite resolution of billing system problems, net profit declines to Pula 2.2 million. Wireless technology introduced in the local loop. BTC Group realises that it has lost significant market share to mobile operators. Introduces pre-paid technology.

    2003VSAT technology introduced. Measures to improve technology and quality introduced

    2005BTC adopts Intelligent Network Platforms strategy and refocuses its strategy based on broadband data. Broad band is rolled out with ADSL in Gaborone. Profitability returns to 139.0 million.

    2007BTC Group awarded a Public Telecommunications Operator licence.

    2000BTC Group looses market

    share. The new billing system creates doubts.

    BTCs image slide. Mobile operators sky rocket with

    their connections.

    2002IDI of Ireland is invited to steady BTC Group.

    Restructuring commences with 600 staff retrenched, staff numbers dropping to

    less than 1,000. Government engages BTC Group for its Rural Development Programme

    (Nteletsa Project). BTC Group records an all time high loss of Pula 39 million

    2004Profitability returns. Total restructuring cost

    Pula 162.0 million. International connectivity established through SAT 3 through South

    Africa. BTC Group endorses Government of Botswanas ICT plan Maitlamo Initiatives.

    2006Telecommunication liberalisation announcement

    by the minister responsible for Science, Communication and Technology.

    2008BTC Group launches its mobile service under the brand name

    be Mobile

    2009Aggressive rollout of the

    beMOBILE Network. Successful launch of converged product

    offering and expansion of broadband to entire Botswana

  • contents

    Corporate Profile 1

    Organisational Structure 2

    Vision and Mission 3

    Board of Directors 4

    Executive Management 6

    Chairmans Report 8

    Chief Executive Officers Report 12

    10 Year Review 16

    Business Review 18

    Corporate Governance 30

    Enterprise Risk Management 50

    Brand Management 56

    Regulatory Report 60

    Human Resources Review 64

    Sustainability Reporting 68

    Corporate Social Responsibility 74

    Environmental Relations and Issues 76

    Economic Performance 78

    Customer Relations 80

    Community Relations 82

    Employee Relations 84

    Supplier Relations 88

    Financial Review 102

    Caution Regarding Forward

    Looking Statements 104

    Financial Review and

    Management Discussion 106

    Report of The Finance and

    Audit Committee 131

    Annual Financial Statements 134

    botswana telecommunications corporation

  • about this reportbotswana telecommunications corporation botswana telecommunications corporation

    group highlights

    gro

    up

    hig

    hli

    gh

    ts

    group financials

    for the year ended 31 March 2009

    (Pula millions)

    GroupEBIDTAupPula89.4millionto Pula268.7million ProfitfortheyearPula118.9million

    net income operating revenuesale of Goods and services

    ebidta - net operating cash Flowearnings before interest Depreciation and taxation

    total assets

    Recommendingdividendof141.4thebe pershareup104.0%. RobustbalancesheetatPula1.65billion Weareconfidentaboutourprospectsfor2009/10

    2008/09 2007/08 change main driversSales 835.9 799.2 + 4.6% New sources such as mobile, data, networks increasing together with stabilisation of traditional fixed and voice lines. EBIDTA 268.7 179.3 + 60.5% An increasingly efficient business with margin progressions. Gross margin at same level as at 53.0 percentage points. Operating costs as a percentage of sales down 7.8 percentage points to 88.7%. EBIDTA margin up 9.7 percentage points. Depreciation and amortisation 151.7 152.9 - 0.8% Managed capital expenditure Finance income 45.9 59.3 - 22.6% Lower cash balances Finance expense 21.2 29.2 - 27.4% Lower loans Net profit / income 118.9 58.3 + 104.1% Reduced restructuring costs

    dumela! once againBTC today is a company confidently moving

    forward, thanks to the essential changes we

    made since 2006. We have now become a leaner

    company striving to be more responsive to our

    countrys and customer needs. We are more than

    ever before determined to realise our goal: to be

    the communications company of choice.

    about this annual reportIt is that time of the year again when we report

    on our performance for the financial year. This is

    our twenty-ninth annual report since our humble

    beginning! In this report, we invite you to share

    our successes, failures, difficulties, achievements

    and our dreams for the future, the way we see it.

    Despite the difficult trading conditions in

    Botswana resulting from the world economic

    down turn, we are pleased to report yet another

    milestone performance for the year 2008/09.

    here are some of the highlights for the year:

    SuccessfullaunchofbemoBIlE,ourmobile servicecoupledwithonetariffstructure ExpansionofbroadbandtoentireBotswana launchofNteletsaII Sustainedfinancialperformance

    160

    140

    120

    100

    80

    60

    40

    20

    0

    1000

    800

    600

    400

    200

    0

    300

    250

    200

    150

    100

    50

    0

    1700

    1650

    1600

    1550

    1500

    1450

    1400

    1350

    Pulamillion

    Pulamillion

    Pulamillion

    Pulamillion

    05Yearended31march Yearended31marchYearended31march Yearended31march

    05 05 0508 08 08 0807 07 07 0706 06 06 0609 09 09 09

    Other sales & service

    Telephone - International

    Data & private circuitsCustomer premises equipment

    Telephone - National

    Local & access services

  • strategic initiativesand business targets

    botswana telecommunications corporation

    area strategic initiatives achievements in 2008/09 business target For 2009 / 10

    Services Increase revenue streams by Enhanced broadband services; Entry into mobile market and new Strengthen our support for BTC outlets; Set up customer promoting customer retention tariff plans; Free weekend calling for customers; Reduced rate centres where they can get assistance; Offer batteries for high through flat rate schemes; for, between fixed and fixed, and fixed and mobile. usage customers; Focus on customer lifestyle and establish Improve bundled packages; long-term value plays; Customer satisfaction surveys. Special billing plans; Enhanced handsets subsidies.

    Network Continue building a superior Expanded metropolitan network; Currently working on Nteletsa II Continue with network availability and quality; Better network network to handle expanded data in northern Botswana; Improved network resilience and reliability management; Developed managed data services. handling ability. through rigourous testing (99.9 % availability).

    Tariff New billing plans (flat structures Introduced bundled tariff packages such as dual play By offering further discount services foster long-term for longer-term commitment); (voice and data) triple play (voice, data and mobility) etc. relationship with our customers; Improved handsets which Bundled tariff plans; Loyalty Upgraded internet packages. can handle multiple sims. benefits; Handset subsidisation.

    NewBusiness Continuously explore new traffic Mobile services; Additional broadband customers. Mobile services; Additional broadband customers. insensitive growth areas with other service providers such as banks, shopping outlets.

    operatingcosts Reduce technology and handset Further headcount reduction; Rationalised expenditure; Opex to revenue down - Expenditure to match businesscontainment costs. Shared services. outcomes and strategies with further reductions in real terms; Further savings in opex through better process and accountability; Shared services.

    Capital Continue to build superior Rationalised capital expenditure and generate cash for investment. Capital expenditure will continue to maintain quality ofexpenditure network to achieve service networks. differentiation and competitive advantage.

    Transformation Continue business transformation. Business demonstrated resilience; Hold voice revenue stream. One BTC programme.

  • Our HistOryBTC Group is a public corporation constituted under the BTC Act 1980 and later amended in 1996. Its mandate is to provide national and international telephony on sound commercial lines.

    From its humble beginning in 1980 with about 6,500 access lines provided mostly by electro mechanical switches linked by analogue radio microwave systems, today it boasts of more than 144,000 access lines all connected by digital switches with thousands of kilometers of fibre optic and digital microwave technology.

    BTC Group provides services nationally. It has two regional offices, four districts offices and a number of customer care centres. It also publishes the Botswana Telephone Directory and provides a countrywide directory assistance service.

    BTC Group is run by a Board, appointed in terms of the BTC Act, supported by an Executive Management Committee. BTC Group is known for its corporate governance practices and is in the forefront of fair corporate reporting in Botswana.