SEL ANTICIPATES SLUMP IN INCOME AFTER ENTRANCE OF SWAZI MOBILE
Anticipates buying stake in Swazi Mobile The company has just paid a dividend of E41 million shareholders in May Its profit after tax also increased from E64.1 million to E73 million
Swaziland Empowerment Limited (SEL) anticipates a slump in income following the entrance of the new mobile company, Swazi Mobile in the local market.
The company holds stake in Swazi MTN.
Speaking during the company’s annual general meeting held on Friday at the Swaziland Water Services Corporation (SWSC) auditorium in Ezulwini, SEL Chairman Cleopas Dlamini said although it has not been possible to determine thus far what the impact would be on SEL’s income, they have observed substantial reduction in the prices of telecoms services.
SEL received a dividend of E66.3 million and has just paid E41 million to shareholders in May, signaling a 11 per cent increase from the dividend received last year.
Dlamini said the company’s investment in Swazi MTN has also just been revalued in accordance with international financial reporting standards to just over E449.5 million.
SEL’s profit after tax also increased from E64.1 million to E73 million.
Dlamini said while they might be no reduction in Swazi MTN’s volumes of business, but the reduction in tariffs might result in a decrease of the company’s profits and consequently, this could affect SEL’s income.
He said it was also possible that Swazi MTN might have lost part of its customers to Swazi Mobile.
As a result, he said the company has to seriously consider investment diversification.
“SEL has not been able to come up with a viable investment diversification strategy to broaden the income base, this remains a challenge to the investment committee,” he said.
Dlamini said only time will tell though, since Swazi Mobile was still new and have not yet totally delivered.
However, he said the return on investment in Swazi MTN has also not been significant over the years though they have been in a monopoly for a very long time. Some of the membership was also of the view that Swazi MTN’s service quality has gone down with the price and said there was a need for shareholders to ascertain how they could inflaunce the company to pull up its socks to survive the emerging competitive environment.
But still, Dlamini said Swazi Mobile a 19 per cent
was still ‘very very new’ to be compared with Swazi MTN.
“We also think that Swazi MTN will continue to invest more in equipment,” he said.
However, he said they have also assessed an opportunity to buy Swazi Mobile shares and they further invited them to make a presentation.
Nevertheless, when tabling the company’s report Investment Committee Chairperson Dan Ntshalintshali said they decided to ditch buying the shares at least for now.
“They were not condemned, but we looked at what was better in terms of returns and we felt this was not the right time,” he said.
Asked if SEL was allowed to buy shares from a direct competitor of Swazi MTN, SEL Secretary Khosi Mhlanga said the Joint Venture Agreement (JVA) could allow SEL to buy only less than five per cent of Swazi Mobile’s total shares.
The shareholders asked the investment committee to reconsider investing in Swazi Mobile provided they could still be able to.
“Given the economic challenges faced by the country, the ensuing operating environment will be challenging, but I am again positive that the board of directors through its management of downside risk will see SEL perform well and return strong shareholder value,” he said.