5 years of inspiring possibilities€¦ · of inspiring possibilities 194 p1,65m total number of...

5 Years of Inspiring Possibilities

www.bofinet.co.bw

Annual Report 2018

BoFiNet Mandate

BoFiNet’s mandate is to • FacilitatingthegrowthoftheICTenvironment

inBotswana.

• Improvingaccesstoknowledge.

• Optimizingtheutilizationofthenational

telecommunicationsfibreinfrastructure.

• Facilitatingopenaccesstoservicesonthenational

telecommunicationsinfrastructure.

• Provisionoffocusedservicesalignedtorequirements

fromwholesalecustomers.

• Makinghighqualitytelecommunicationservices

affordableandthusaccessiblebyall.

BotswanaGovernmentwhollyownedcompanythatoperatesasawholesaleproviderofnationalandinternationaltelecommunicationinfrastructure.BoFiNet’smandateistoprovideandoperatethenationaltelecommunicationsnetworkinfrastructureresponsiblefordrivingconnectivityandtheenablementofeconomicgrowth.

About BoFiNet

ContentsAbout BoFiNet

Vision, Mission and Values

Chairman’s Statement

Board of Directors

Corporate Governance

CEO’s Statement

Executive Management

Strategic Infrastructure Projects

Network Operations

Local Network Expansions

International Connectivity

Internet Traffic and Content Growth

Products and Services

Human Resources Report

Corporate Social Responsibility

BoFiNet In Pictures

Financial Statement

IFC

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ONLINE You can find this report and more information about BoFiNet online at http://www.bofinet.co.bw/. Our Annual Report along with other relevant documents, can be downloaded at http://www.bofinet.co.bw/downloads.

This reporting period marks 5 years since the establishment of BoFiNet and launch of the first services and products to the market.

5 Years of Inspiring Possibilities

194

P1,65m

Total number of employees as at 2017/18.

Softball league sponsorship increased to P1.65million during this year.

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Botswana Fibre Networks � Annual Report 2018

5years of inspiring possibilities

Staff demonstrate leadership, accountability, transparency, honesty and upholding the highest standards of governance and taking responsibility at all levels of the organisation.

We are proactive, agile and creative in identifying market opportunities.

We lead in providing solutions that surpass market expectations and trends.

We commit to prompt and timely response to our customers.

We work together, sharing knowledge and insights across the organisation to create value.

Globally Connecting Customers through High-Quality, Affordable and Accessible Broadband Telecommunication Infrastructure and Services.

A Provider of Choice for World-Class Broadband Telecommunication Infrastructure and Services.

MIssIon

VALUEs

VIsIon

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BoFiNet – Service Provider – Consumer Relationship

BoFInET� Builds the Telecoms National Infrastructure� Enables Service providers (ISPs) to provide service to Consumer

IsP� Buys services from BoFiNet � Provides services to consumers� Responsible for service quality & relationship with consumer

Consumers� Buys Service From ISP� Deals directly with ISP as 1st point of contact

IsP A

IsP B

IsP C

Banks Universities Farms

Mines Hotels Residentals

Manufacturers Retailers Hospitals

$

BoFiNet Customers

BoFiNet provides wholesale telecommunications services directly to its customers, being licensed Internet Service Providers, Value Added Network Service Providers, Public Telecommunications Operators and International Operators. BoFiNet customers utilize the infrastructure to develop various connectivity products, bundled with various ICT solutions and retail them to end-users (consumers). Consumers can be individuals, businesses or any other organization that utilizes the telecommunications services directly.

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Chairman’s Statement

I am pleased to present the Botswana Fibre Networks (BoFiNet) Annual Report for the 2017/18 financial year. It has been 5 years since the establishment of BoFiNet and launch of the first services and products to the market.

BoFiNet owe its existence to a visionary decision made by the Cabinet to establish an organization geared towards the facilitation of the growth of an active ICT environment in Botswana. Key to this mandate was to provide open access to the national telecommunications infrastructure and its services.

Mr. Ratsela Mooketsi Board Chairman

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I am proud today to report

that great strides have

been made in achieving

major milestones set in line

with this mandate.

I would hasten, in this regard, to acknowledge the unwavering support and facilitation of our Ministry and other key stakeholders in this journey.

Since inception, BoFiNet has put its customers and the nation at the forefront of everything it does, as enshrined in all its strategic plans’ value propositions. The strategic plans, aligned to the country’s National Broadband Strategy and the Maitlamo ICT Policy, recognize the importance the company plays in driving broadband connectivity and economic growth. Consonant also with the Ministry strategic goals, the Company has developed a 2017-2020 strategic plan focusing on improving broadband coverage and connectivity, affordability and providing an enabling ICT environment for socio-economic growth. Our strategy will, among others, focus on national broadband coverage and strategic partnerships. While the goal of the former will be to achieve broadband penetration and access by all, the latter seeks to secure high-value partnerships that would facilitate access to capital, markets and consequently backhaul transit costs reduction.

Great efforts have been expended in deploying the national backbone infrastructure to increase network coverage across the country, thereby increasing the number of localities connected to the national fibre backbone network. In line with the broader goals of universal access fund, BoFiNet has

also made strides in the provision of Public-Wholesale Wi-Fi and Events Wi-Fi in strategic areas such as hospitals, shopping malls, select sporting arenas, Government enclaves and airports across the country. As a result of this, internet uptake has increased nationwide.

The availability of Wi-Fi and quality of standards of internet in terms of speed and stability of the connection remain one of the key considerations for selecting the suitability of a country to host prestigious international events. I am confident to report that Botswana has had the pleasure to display this incredible capability and hosted a number of auspicious international events, examples being the World Baseball Softball Congress, Congress in Gaborone, Netball World Youth Cup 2017 (NWYC2017), Second Giant Club Summit and targeting growth in this space for 2018.

While infrastructure deployment remains the requisite enabler, it is the quality, accessibility, affordability and socio-economic equitability of the products and services that have always been top of the agenda for the company. In that regard, tireless efforts are being made to ensure that the services are high-speed, high capacity, high quality, reliable and low-cost. Key initiatives continue to be undertaken with the sole aim of ensuring this.

Up to the end of the 2017-18 financial year, the Company had secured and entered into five (5) partnerships nationally and internationally.• Paratus – BoFiNet partnership for the

Trans-Kalahari Fibre in Namibia, which has resulted in the establishment of access route connections between Ngoma-Katima Mulilo-Shesheke and the Swakopmund-Mamumo.

• Botswana TelecommunicationsCorporation – BoFiNet partnership for the national deployment of Giga-wire and fibre deployment to the cabinet for improvement of residential broadband connectivity.

• Botswana Post partnership for nationalWi-Fi deployment to seventy-seven (77) post offices across the country that has extended the Public Wi-Fi reach, increased access to internet, and associated benefits.

• Mascom – BoFiNet SchoolConnectivity partnership (Corporate Social Responsibility) which provided connectivity to 400 schools countrywide.

• Botswana Investment and TradeCentre - MetroTech – BoFiNet partnership for Free Wi-Fi at national airports; Maun, Kasane, Francistown and Sir Seretse Khama Airport where BoFiNet’s role was the provision of the supporting Wi-Fi infrastructure.

We continue to improve the quality of the Public Wi-Fi hotspots dubbed Botswana Hotspots available in strategic areas such as hospitals, shopping malls, select sporting arenas, Government enclaves and airports across the country.

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Following the Government decision on reduced funding for pararastatals and need for self-sustainability, the Company received a reduced subvention to the tune of P34,700,000.00 against total budget costs of P332million (10%). The rest of the budget (90%) was funded through proceeds generated from operations, an indication that the company is on the right path to self-sustainability.

Beyond providing an enabling ICT environment for the economic growth and development of the country, the company also ensures private sector participation in its operations through outsourcing, commercialization and divestiture activities, which is in line with the Government agenda for economic transformation. Key strategic business activities have been outsourced to the private sector, being the maintenance and support of sites countrywide, which for 2017/18 were to the tune of P88million and the implementation of all infrastructure deployment projects, which for the financial year 2017/18 were to the tune of P137,532,651.14.

The company is also implementing non-commercial activities for social development as a corporate citizen. A deliberate Corporate Social Responsibility Programme is in place to achieve the social mandate the company strives to achieve alongside implementation of its infrastructure projects. To date, seven (7) initiatives have been implemented with success, with the support and cooperation of stakeholders; These are,1. The Schools Connectivity and ICT

equipment donations in partnership with Network Development Sub-Contractors and other strategic partners to stimulate broadband penetration in schools.

2. Softball sponsorship to developcommunities and individuals through sports.

3. Sponsorship of the PovertyEradication Conference with Wi-Fi connectivity to facilitate smooth discussions on poverty eradication issues.

4. Promotion of ICT andTelecommunications in underprivileged communities (World Telecommunications and Information Society Day, Girls in ICT Commemorations).

5. Sponsorship and participation in theCommunity Service Day and Wellness activities for community development.

6. Content Provider’s ExhibitionSupport for development of the local content in support of entrepreneurship development initiatives by Government.

7. Community Outreach Program forunderprivileged children in the form providing support for, school requirements, sourcing lodging space at boarding schools, providing opportunities for life skills workshops, overall mentorship and social support.

On Corporate Governance, the Company has put in place the necessary policies, regulations, procedures/processes and structures that facilitate and guide operations of the company. The external audits conducted on the company in the past four (4) financial years have been passed, with the control environment considered fair. Currently, a process optimization initiative is ongoing to improve processes for efficiency. Implementation of the risk management framework and implementation of audit recommendations is also on course. During the financial year 2017/18, Management achieved a 78% rating on closure of audit queries. Of the 57 findings raised, 41 are closed, 14 are work-in-progress and 2 are yet to be closed.

Anti-corruption initiatives are also being implemented in line with the expectations of the Ministry and of Government. The Board of Directors has approved the Anti-Fraud and Corruption Policy and the Whistle-Blowing Policy. Tip-Off Anonymous hotlines have been established with the 3 major mobile operators in Botswana and for fixed line calls as well as fax, email and postal services. Employees have been taken through awareness campaigns to sensitize them on these policies and hotlines.

Notwithstanding the above strides and achievements, we remain cognizant of the challenges of quality of service experienced by the end-users, increasing customer and national needs and expectations and the changing dynamics presented by both the industry and the market. While the company has put in place measures to ensure high-quality service, at both provisioning and assurance, more needs to be done by the service providers in passing the same quality and benefits to the end users. Engagements with the service providers and the regulator are ongoing on this matter and we are hopeful this will address the challenge. Competitive pressures emanating from transit backhaul costs, local content sourcing challenges and underutilization of expansive network capacity remain areas of concern for us. We, however, remain hopeful that as we explore and implement initiatives such as strategic partnerships, engagement of stakeholders and the shareholder and development of market-relevant products and services and, above all, through Government support, through the Ministry, we will effectively deliver on our mandate. A lot still needs to be done in the rollout of the backbone infrastructure and the access network to transform the telecommunications sector and the socio-economic fabrics of the citizens of this country and one needs not over-emphasise the need for concerted efforts by all stakeholders.

Chairman’s Statement (continued)

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In conclusion, I wish to note that we, as the Board and Management of BoFiNet, remain committed to ensuring that the company performs and delivers to expectations. We will continue to provide leadership and oversight that is above board. Employee productivity has thus far been to expectations, as employees are meeting performance thresholds and in line with the corporate strategy targets. Human resource capacity-building initiatives are being undertaken through provision of both technical and professional training to address skills gaps, in line with industry and market needs.

Enforcement of governance structures and implementation of the quality management system are among the priority areas that Management will be expected to improve on going forward.

I thank you.

Mr Ratsela MooketsiBoard Chairman

BWP226million

outsourced servicesEstimate Cost

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0304

05

Board of Directors

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01. Mr. Ratsela Mooketsi ChairpersonMr Mooketsi is the Chairperson of the Board of BoFiNet, and a former Board Member of Botswana Telecommunications Corporation. Mr Mooketsi is currently the Director of Information Technology at the University of Botswana and carries with him over nineteen (19) years of his career in leadership roles. He graduated with Bachelor of Science from the University of Botswana, Bachelor of Engineering (telecommunications) from Anglia Polytechnic University, Master of Information Technology from the University of Newcastle (Australia) and holds a Master of Science in Strategic Management from the University of Derby (UK). He is an Associate Member of the Institute of Engineering and Technology (UK) and a certified IT Manager. He has experience in the ICT industry which spans over thirty (30) years.

His works within the ICT spaces experience which spans thirty (30) years. Mr Mooketsi has been instrumental in the introduction of internet in Botswana. He continues to champion the growth of ICT in the country.

02. Ms. Pauline sebina Vice ChairpersonMs. Pauline Sebina is the vice-chairperson of the Board of Directors of Botswana Fibre Networks. In addition, she serves as a member of the Board Finance and Audit committee. She holds a Bachelors Degree of Commerce (B.com) and qualified ACCA Association of chartered certified Accountants. A retired executive with over twenty-five (25) years of experience in financial management, general

management she continues to impart her extensive knowledge and provides leadership in various industry sectors. She draws from her experience from mining, telecommunications, financial services and the insurance sectors to provide the leadership of BoFiNet to ensure the shareholders’ interest in all financial aspects of business are met and that the business‘s mandate in this regard is balanced.

03. Mr. Marvin T. Torto MemberMr. Marvin T. Torto is a founding Board Member of BoFiNet. He holds a Bachelor of Law Degree from the University of Botswana. He provides critical advisory role to the Board of Directors on matters pertaining to the legal aspects and impacts on the business. Mr. Torto is the Managing Partner of Salbany & Torto Attorneys, a Gaborone based multi-disciplinary firm of Legal Practitioners. He has previously served as the Vice Chairperson of the Law Society of Botswana and a member of the Judicial Service Commission. He holds a wealth of experience and practice in areas of property law, alternative dispute resolution and general litigation.

04. Ms. Malebogo Mpugwa MemberMs. Malebogo Mpugwa serves in the Board of Directors of Botswana Fibre Networks Ltd (BoFiNet) and is the chairperson of the Board Human Resource Committee. Her capital knowledge and experience in Human Resources provide critical guidance to the human capital resource of BoFiNet. In addition to her role on the Board of Directors

of BoFiNet, she is a member of the Botswana Development Corporation (BDC) Human Resources Board committee. Based in the United Kingdom she is employed as the Head of Talent for Anglo American. She has extensive experience in the upstream diamond business and is now accelerating her learning and growth in the midstream side of diamond business. Prior to this, she was Head of Human Resources for De Beers Global Sightholder Sales (DBGSS) since 2012.

05. Mr. Gadzani Albert Thangwane Member Mr. Thangwane serves as the Chairperson of the Board Tender Committee at BoFiNet and a member of the Board Finance and Audit Committee.

A telecommunications expert with thirty-six (36) years of experience within a technical environment including over ten (10) years of Management and Executive positions. Mr. Thangwane holds a Degree in Electrical Engineering from South Dakota State University in USA. He worked for Botswana Telecommunications Corporation and his role involved conceptualizing, planning and execution of the organizational strategies. He was elevated to the rank of General Manager Operations, responsible for service delivery and then General Manager Technology responsible for planning and development of the entire network infrastructure. He is currently a retired Telecommunications Engineer.

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Board of Directors (continued)

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06. Ms. Yolisa Philips-Lejowa MemberMs. Yolisa Philips-Lejowa is a member of the Board of Directors of BoFiNet and serves in both the Board Tender Committee and Board Human Resources Committee. She has over twenty (20) years of experience in the banking industry with an extensive involvement in the Digital Banking environment. Her role in the introduction of innovative solutions such as online Banking, cell phone Banking, FNB e-Wallet and Mobile App into the Botswana market was significantly notable. Currently she is part of the Virtual Payments Solutions (VPS) team; providing integration and aggregation services, for the management of virtual payments and disbursement solutions.

07. Ms. Lynnette Armstrong MemberLynette Armstrong sits in various Boards in addition to serving on the BoFiNet Board of Directors. These include Board of trustees for Debswana Pension Fund, Board of Morupule Coal Mine and Board of Botswana Accountancy oversight Authority. She serves in the BoFiNet Board of Directors as the Chairperson of the BoFiNet Finance and Audit Committee. Lynette is a Chartered Certified Accountant (ACCA). She completed the Accelerated Development Programme at the London Business School of Management as well as an Executive Personal Development Coaching Programme.

She is the Chief Financial Officer (CFO) of Debswana Diamond Company. As Debswana’s CFO, she is responsible for the financial strategy of the company, which

entails ensuring adherence to best practice in corporate governance, business value management, long term financial planning, financial capital management and statutory compliance. Lynette has extensive business and financial management experience in the mining industry in Botswana.

08. Mr. John Vassiliadis MemberMr. Vassiliadis serves BoFiNet as a member of the Board Finance and Audit Committee. Mr. John Vassiliadis has a Masters in Information Security and Intelligence from Edith Cowan University (Australia), A Post Graduate Certificate in Telecommunications Regulation from Westminster University (UK), Bachelor’s Degree in Science (BSc) - Computer Science from University of Botswana. In addition, Mr. Vassiliadis holds a number of professional certifications, some of which include a Datacenter Certified Expert (DCE) from EPI and Accredited Tier Designer from UPTIME. He is currently the ICT Director at HRDC having previously worked at Director Level under the Government Implementation Coordination Office, National Strategy Office in the Office of the President, e-Government office under Ministry of Transport and Communications, BTA, currently known as BOCRA, and has experience within the private sector.

09. Professor shedden Masupe MemberA member of the BoFiNet Board Human Resource Committee. Professor Shedden Masupe holds a BSc (Mathematics & Physics) from

Mt Allison University (Canada), BSC Eng. Electrical – Communications and Fields from University of New Brunswick (Canada), MSc. Digital Systems from Cardiff University (UK) and a PhD Electronics Engineering from Edinburgh University (UK). He is currently the Chief Executive Officer at Botswana Institute for Technology Research and Innovation (BITRI). He was previously a Full Professor of Computer Engineering at BIUST and an Associate Professor of Digital Systems and Computer Engineering at the University of Botswana. Prof. Masupe has worked extensively as a consultant in the ICT industry in Botswana and internationally.

10. Mr. othusitse Lebuletswe MemberMr Othusitse Lebuletswe holds a Master of Public Administration, a Bachelor’s degree in Accounting and Public Administration and a Diploma in Accounting and Business Studies. He was appointed to BoFiNet Board in June 2018 and subsequently appointed Chairperson of the Finance and Audit Committee. He rose through the rank and file within the Ministry of Finance and Economic Development, becoming a Director of Procurement in 2003 and later appointed Deputy Accountant General in 2008 until his retirement in November 2017. He has been in a number of Boards having been a Board member and Chairperson of the Finance and Audit Committee at BCL, Chairperson of the Board, Botswana Savings Bank and Member of the Standards and Setting Committee of Botswana Accountancy and Oversight Authority (BAOA).

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Corporate Governance

The company accomplished this through strict adherence to the principles of transparency, integrity and international best governance practices in general. To attain this, the company adopted operational policies to enhance compliance and achieve its strategic deliverables. At the helm of strategic direction is a Board of Directors, appointed by the Minister of Transport and Communications on behalf of the shareholder. The Board of Directors and its Committees are in charge of corporate governance and bestowed with the responsibility of ensuring the company’s compliance to laws, codes of best practices, regulations, and successful implementation of the company strategy.

During the year under review, BoFiNet continued to subscribe to sound best practice systems, principles and processes of governance to ensure the achievement of its vision and fulfillment of its mandate for the benefit of the shareholder and the stakeholders at large.

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The Board of Directors The Board consists of nine (9) non-executive Directors. The selection and appointment of members of the BoFiNet Board is a prerogative of the Minister of Transport and Communications. The appointment of the Board of Directors bases on the principles of best practices of Corporate Governance and prescribed skills and experience for the various roles relevant to the nature of BoFiNet business. As a result, the Board members possess a diversity of skills, competencies, experience and disciplines that capacitate them and would competently ensure good corporate governance implementation and monitoring within the structures of the Company. Corporate governance is integral to good governance. BoFiNet maintains its responsibility to corporate citizenship through the adherence to the Company Constitution, and all the applicable statutory requirements, including international governance practices. To achieve this, the Board ensures that there is adequate systems, processes and work force in place, monitors the financial and operational performance of the Company, and the impact of its business on the society within which it operates. Furthermore, the independent risk controls, such as audit, support the Board of Directors in ensuring adherence to corporate governance, in addition towards ensuring successful implementation of the strategy of the Company.

The Board has oversight over its committees. Governance instruments, which include the Board and respective Committee Charters, guide the Board in conducting its business. These are informed by international corporate governance codes.

ComplianceBoFiNet operates within a highly regulated environment under the auspices of Botswana Communications Regulatory Authority - BOCRA In an effort to achieve the required levels of compliance; there exists a Regulatory and Compliance function within the Legal Unit of the company. This Unit coordinates the submission of all required reports to the Regulator. In addition to complying with the requirements of the Communications and Regulatory Act, the Company is further obliged amongst others to comply with the following statutes:a) Income Tax Actb) Value Added Taxc) Public Finance Management Act

Internal AuditThe Internal Audit Services has the responsibility of providing assurance to the Board of Directors of Botswana Fibre Networks (Pty) Ltd and Management on efficiency and effectiveness of governance, risk and control processes.

External Audit For the year under review, independent auditors, KPMG, audited the Company’s annual financial statements. The Company believes that the auditors observed the highest level of professional ethics in the execution of their mandate, and have acted with absolute independence. Details of the fees paid to the external auditors are disclosed in the notes of the financial statements.

Enterprise Risk ManagementDuring the year under review, BoFiNet appointed a Risk Specialist mandated to provide strategic and operational governance, compliance, risk management advice and services to support the achievement of business strategies and corporate governance

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requirements. The role also ensures an assessment of all business risks and their inclusion in the Risk Register in addition to continuous monitoring. The ICT environment is dynamic and these changes may pose some uncertainty to any industry participant. The fast-paced landscape poses some risk that require an equal fast speed to manage their potential impact through proactive mitigation. In this regard, effective risk management remains a priority for the Board. Its achievement is through the implementation of the Company Enterprise Risk Management Policy and Framework, which the Board adopted.

The Enterprise Risk Management Policy and Framework was drafted in line with Committee of Sponsoring Organizations of the Treadway Commission (COSO) Integrated Enterprise Risk Management Framework of 2004. It is consistent with the King III Report on Corporate Governance 2009 as well as The Botswana Code of Corporate Governance. This policy and framework intents to support the vision and mission of BoFiNet through intertwining risk management with the strategies and objectives of BoFiNet, guiding the allocation of resources, influencing the company’s attitude towards risk, enhancing the corporate governance structure of the company and encouraging goal congruency in all departments of the organization.

Current and new employees underwent Risk Management Awareness workshops on regular basis. The focus of the exercise was to create a risk awareness culture within the organization and a team approach to risk management.

This will enable members to identify, assess, mitigate, monitor and report on risks. The Risk Management department has achieved the development of Project Management Office and Corporate Services divisional risk registers, as well as continuous monitoring of top ten (10) risks to ensure that they are within the set tolerance levels and defined risk appetite. The Risk Specialist forms part of all the Finance and Audit Committee meeting to provide an update on Enterprise Risk Management.

Board MembersThe Board Members for the period under review were:

• Mr. Ratsela Mooketsi – Chairperson • Ms. Pauline Sebina – Vice Chairperson • Mr. Marvin Torto – Member • Ms. Malebogo Mpugwa – Member • Mr. Gadzani Albert Thangwane – Member • Ms. Yolisa Phillips-Lejowa – Member

Corporate Governance (continued)

BoFiNet Internal Audit Services has, in line with current trends and best practices, adopted a risk-based approach in planning and executing audit engagements since inception covering the year under review and going into the future.

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• Ms. Lynnette Armstrong – Member • Mr. John Vassiliadis – Member • Professor Shedden Masupe – Member

Board Committees In order to provide the necessary focus and oversight, the Board has delegated its powers to three (3) standing committees. These are the Board Tender Committee, Board Finance and Audit Committee and the Board Human Resource Committee.

Board Tender Committee The principal purpose of this committee is to ensure the observation of procurement principles, rules and regulations throughout the procurement process. This relates to ensuring adherence to principles of fairness, transparency and value for money during the procurement and disposal process. The threshold for the committee is for procurement of goods and services valued between P5 000 001 and up to P30 000 000.

The Committee comprises of three (3) non-executive Members and the members for the reporting period were: • Mr. Gadzani Albert Thangwane – Committee Chairperson • Ms. Yolisa Philips-Lejowa – Member • Mr. Marvin Torto – Member

Board Finance and Audit Committee The Finance and Audit Committee serves to ensure, create, and maintain an effective control environment for BoFiNet. The committee reviews financial controls, accounting systems and reporting to external stakeholders. Importantly it also provides oversight over the audit function of the organization, including the appointment and compensation of the external auditor. The Finance and Audit committee consists of four (4) non-executive members, being:

• Ms. Lynnette Armstrong – Committee Chairperson • Ms. Pauline Sebina – Member • Mr. Gadzani Albert Thangwane – Member• Mr. John Vassiliadis – Member

Board Human Resource CommitteeThe function of the Committee is to assist the Board in fulfilling its corporate governance responsibilities with regard to oversight on strategic human resource matters, including remuneration. The Committee regulates both substantive and procedural administration of staff welfare issues, which include amongst others, the recruitment process, training and development, succession planning and talent management industrial relations matters, remuneration and compensation. The Human Resource committee consists of four (4) non-executive members, being:

• Ms. Malebogo Mpugwa – Committee Chairperson • Mr. Marvin Torto – Member • Professor Shedden Masupe – Member • Ms. Yolisa Philips-Lejowa – Member

Board Attendance FeesThe Board and its Committees met for all the scheduled quarterly meetings for the year under review. Some special meetings were convened outside the schedule as and when the need arose. The policy for remuneration informs payment of the BoFiNet Board fees as follows: • Chairperson – P 2250 per sitting • Member – P1 800 per sitting

Declaration of Business Interests The Board Members are required to declare their business interests at every Board and/or committee meeting to ensure observance of corporate governance principles.

Company Secretary The Company Secretary is responsible to ensure the proper administration of the Board and its committees. Directors engage with the Company Secretary regularly for governance and regulatory advice as well as preparing the annual meeting schedules in consultation with the Board Chairman and Chairpersons of the various committees. The Board has unrestricted access to the Company Secretary. For the year under review, the Company employed an internal Company Secretary being Ms. Tshenolo Moyo, who resumed duty on 1 September 2017. In this regard, Kingsway (Pty) Ltd seized the provision of company secretarial services to BoFiNet with effect from 1 December 2017, after handing over to Ms. Tshenolo Moyo.

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CEO’s Statement

The Financial Year 2018/19 marks the Fifth (5th) Anniversary of the Botswana Fibre Networks (BoFiNet) since its inception in October 2013.

Operational Highlights

The Financial Year ended 31 March 2018 marked the first year of the new three-year corporate strategy, henceforth referred to as Strategy 2020. The strategy, which is the third since BoFiNet came into existence, builds up on the achievements of the other strategies before it and charts a new path for the company. It symbolizes and signifies the seriousness with which we make commitments to creating value for our customers and our shareholder.

Mr. Mabua Lesego Mabua Chief Executive Officer

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Since inception, BoFiNet has had three (3) Strategic Plans, each building on the achievements of the others. The initial strategy for the financial year 2013/14 focused on formative imperatives of the company, with special emphasis on the setting up of key processes, systems and capacity building as the company positioned itself for the

delivery of its mandate.

The second strategy for the financial year 2014/2017 aligned the company with the broader goals and objectives of the National Broadband Strategy, with the overall vision to connect every citizen, business and communities to a high-speed broadband infrastructure at appropriate quality of services and affordable prices. While the Government had already made huge investments on ICT networks at international and national levels, access or last mile connectivity to businesses and homes was not fully explored. The 2014/17 BoFiNet strategy was anchored on three strategic focus areas; National Broadband Coverage, Operational and Service Excellence and Self-Sustainability. Within the five (5) years that BoFiNet was established, tremendous progress has been made in line with the focus areas:• The company has achieved

profitability since the third year of operation and is on course to self-sustainability.

• Broadband fibre infrastructure hasbeen deployed across the country, covering about 90% of the country, thus facilitating high-speed and high capacity connectivity.

• During this period, 203 localities(villages, sub-urban and urban centres) were connected to the national backbone fibre network. One hundred and fifty eight (158) villages/sites on high capacity and forty-five (45sites) on microwave radios. Fibre-To-The-Business-(FTTx) infrastructure was provided in 11 localities, in line with the National Development Plan (NDP). This makes an achievement of eleven (11) out of a target of 38 localities. The completion of the deployment of FTTX in Gaborone, Francistown, Maun, Kasane/Kazungula, Phikwe, Serowe, Palapye, Mogoditshane, Tsabong, Bobonong and Lobatse, paved way to customer business connections.

• The deployment of broadband wirelessinfrastructure to forty-five (45) localities around the country complements the more capital-intensive FTTX rollout. The infrastructure has enabled broadband services to one thousand and forty-five (1045) business customers. Overall, a capacity of five hundred and forty four thousand two hundred and eighty eight (544.288) Gbps purchased, owing to the provision of 5643 services.

• BoFiNet is in the process ofimplementing Phase 2 and 3 of the FTTx rollout plan for Gaborone and Francistown with intention to cover all commercial and Government premises in the two (2) cities in the next two (2) years with high-speed broadband connectivity. The infrastructure capability is to deliver up to 2.5Gbits to the customer. The plan is to rollout Fibre to the Government Offices/Premises (FTTx), with a target for 2018/19 being 2,200, covering industrial, commercial land, civic and community areas in Gaborone.

• Public Wi-Fi infrastructure is availed instrategic areas around the country. This includes the National and the Francistown Stadia.

This provides high-capacity public internet infrastructure to cater for internet use during national events. Public Wi-Fi wholesale services are present in seven (7) localities covering 34 hotspots, including some commercial malls, hospitals, bus (public transport) ranks, and Government enclave. There is a need to drive utilization of the resources by the citizens and the business community.

• A reduction of more than 80% onwholesale internet tariffs was achieved and in the process stimulating internet uptake growth. In addition to this 30.98% of total internet, traffic is localized.

With the new strategy, the company has adopted a customer-focused approach, placing more emphasis on delivery on the customer value proposition so as to attract and retain customers. Improvement efforts and achievement of key milestones towards service delivery and assurance through optimization of service-delivery processes and development of market-relevant products continues. Achievement of this objective is expected to increase the company’s profitability and achieve long-term operational sustainability. Long-term operational sustainability is an imperative for the company going forward, following the reduction of Government’s subvention by 50%, from P68million to P34million.

of internet traffic localised

31%

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Improved stakeholder, customer and shareholder engagement and aggressive marketing initiatives to promote uptake of products and services delivered by the expansive backbone and FTTx networks are in place. The company continues to strive to diversify its product portfolio, having introduced the undersea wet segment product, event Wi-Fi for corporate functions and national events. Overall product uptake over the years has averaged 74%, especially for flagship products, being National Leased Lines (NLL) and Internet Protocol Transit (IPT). Uptake of services such as International Private Leased Circuit (IPLC) and Colocation services, however, still necessitates improvement. Although they are not major revenue contributors, the products remain important in the advancement of the mandate towards open access.

Strategy 2020 Implementation Following the end of the 2014/17 strategic plan, the company developed a new vision for the next three years (2017/20), thus giving birth to its Strategy 2020. A review of the company performance since 2013 formed the basis for the development of the strategic plan.

The latest developments in the industry and the decision by Government to reduce subventions to the company going forward also gave impetus to the process.

Attention was given to a review of the pillars of strategy, which are; Mission, Vision, Strategic Themes and the company Values. These were revised as follows.

Mission: “Globally Connecting Customers through High Quality, Affordable and Accessible Broadband Telecommunication Infrastructure and Services”.Vision: “A Provider of Choice for World-Class Broadband Telecommunication Infrastructure and Services”.Strategic Themes: The strategic themes are the areas in which the company aims to excel in order to achieve its vision and fulfil the expectations of the shareholder and its customer value proposition. The following four (4) strategic themes guide the BoFiNet’s Strategy 2020:• National Broadband Coverage• Service Excellence• Organizational Efficiency• Strategic PartneringValues: Innovation, Responsiveness, Teamwork, Results Focus, Pro-activeness

While inherently retaining the spirit of the founding vision that shaped the strategic direction of the company over the years, the new vision anchors on a customer-focused approach the company has adopted going forward.

With the new strategy, the company seeks to have Botswana connected globally and delivery of a national-wholesaler service that is at par with the best in the world.

Market Performance The company’s strategies have translated into impressive results over the years. We have maintained our wholesale market-leader position in Botswana and now boast of a significant customer base. Utilization of the fibre infrastructure has increased from below 20% to over 80%, bringing with it new customers. These achievements are a result of a combination of efficient service provisioning systems/processes and the commitment of BoFiNet staff and management to providing unmatched customer experience.

Exploration of Wi-Fi wholesale partnerships with the internet service providers continues, with some already implemented in order to improve the sale and uptake of wholesale Wi-Fi products.

Strategic PartnershipsPartnerships are a critical resource for BoFiNet’s achievement of its mandate. The company continues to optimize the partnerships for joint deployment and ownership of the transit backhaul through Namibia and South Africa in order to reduce connectivity costs and make the country more competitive. During the Financial Year 2017/18, the company secured three (3) international partnerships; Paratus – Trans Kalahari Fibre (TKF) and Ngoma-Sesheke partnership project progress on going. Local partnerships include; BTC-Giga Wire Deployment being implemented.

As seen below, the company’s performance, from a financial perspective, has been impressive: Year-On-Year Profitability: 2013/14 - 2017/18

2013/14 2014/15 2015/16 2016/17 2017/18

Revenue 41,617,049 178,511,861 268,776,165 307,918,726 321,528,378

Profit/(Loss) before Tax (33,057,332 ) (68,860,649 ) 24,826,482 18,344,327 8,425,157

Taxation 542,612 9,726,666 (3,423,400 ) (39,610,383 ) 36,669,754

Profit After Tax (32,514,720 ) (59,133,983 ) 21,403,082 (21,266,056 ) (28,244,597 )

CEO’s Statement (continued)

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Botswana Post Partnership – National Wi-Fi deployment has commenced, Botswana Investment and Trade Centre (BITC) for provision of free Wi-Fi in airports. Total Wi-Fi connections increased, mainly due to the strategic partnerships.

Organisational Capability and Capacity To enhance capacity and capability of the company to meet customer/stakeholder requirements, BoFiNet implemented a new resourcing structure that increased its human capital from the initial 127 to the current 187 permanent positions.

In addition to this, the company supports the Government Internship Programme – whereby BoFiNet established for itself a threshold for 30 interns. The interns are engaged in various disciplines to deliver on the various functions of the company

at a more professional level. To date, the company has absorbed 60 interns into full and professional positions in the last 5 years.

In addition to the human capital, the company has made advances in optimizing its service delivery processes through the Operating Support Systems (OSS)/Business Support Systems (BSS) modules. The optimization initiative has enabled BoFiNet to operate efficiently and effectively, with quicker turn-around times.

80%

Wholesale Internet Tariffsreduced by more thanˆ

19



Areas of Improvement Notwithstanding the above achievements, I wish to acknowledge the gaps and shortcomings that came into being during the course of our journey as a new company. The Customer Satisfaction Survey that we undertook last year pointed to certain areas that need improvement; issues around stakeholder engagement, issues around service quality on the end-user side and issues of pricing vis-a-vis quality on the side of service providers were among those that need to be seriously looked into, hence our renewed commitment, through this strategy, to address them.

International Suppliers BoFiNet is facing intense competition from suppliers in the neighboring countries who do not incur transit costs, as they ride on their existing infrastructure that has access to the seashores, to deliver services to customers. Because of this, the company has had to undertake a review of its tariffs on an annual basis, often to a sub-optimal rates, to keep up with competition. Process OptimizationAs we strive towards the achievement of our objectives and goals of self-sustainability, operational and service excellence as a company, we recognize the need to be creative, innovative and increase efforts in the way we work. This entails a change of mindset, pro-activeness, heightened commitment, accountability and cohesive teamwork. A united understanding and clarity of priority focus areas by all stakeholders is critical to creating a firm value chain and paramount to the achievement of our strategic intentions.

Although optimizing the service delivery process is intended to bring efficiency, it has had implications on the different functions, the nature of the crosscutting process presents a number of challenges. As is with any initiative that brings about change that pushes people from

their comfort zones, the optimization is not without challenges. The company, however, continuously embarks on change management and mind-set change initiatives for staff to ensure staff unity and alignment of purpose in the endeavor to delivering requisite value to the customers.

Capital Expenditure FundingExpansion of the broadband and backbone access networks, with both fixed and wireless technologies, is a capital-intensive undertaking. It remains core to almost all economic activities and a critical factor in positioning the country as a competitive and attractive destination for foreign direct investment. It is, therefore, imperative that funding for BoFiNet from the Shareholder continues in order to support these developments to scale up the competitiveness of the country.

Content Sourcing Local content sourcing remains a challenge, since content sourcing has traditionally been outside the country. This results in BoFiNet incurring costs to the different worldwide content destinations. In spite of this, the company has influenced an increase in uptake of local content. Local Content accounts for 6.55 Gbps, thus 30.98% of total internet traffic localized. South Africa traffic accounts for 9.92 Gbps of the total 21.14 Gbps IPT traffic, equivalent to 46.93%.

OutlookMarket DynamicsAcross the globe, consumer and market trends, products and service models, technological developments, governance and regulation, business and operating models are changing at an unprecedented speed. Consumer tastes and preferences are changing fast and forcing companies to innovate their product and service offerings at an equally speedy pace. The shelf- life of technology has become very short.

Company and regulatory frameworks are equally shifting. Mergers, acquisitions and partnerships take place on the backdrop of the prevailing market dynamics and influence business models and the operating landscape. Botswana as a part of the global village is not exempted from this whirlpool of developments.

• Some major players in the mobile sectorare already offering latest technology services like the 4G LTE services,

• We see some players going intopartnerships to enable better and more affordable access to digital money transfers in the mobile money market,

• Some players have witnessed anincrease in data-centric products – motivating them to develop and launch product packages accordingly.

• Other players are developing andoffering substitute products that are directly competing with BoFiNet products, like the Wi-Fi services to the public during events.

CompetitionThe developments taking place in the industry and the market space are presenting both opportunities and challenges for BoFiNet. The evolution of products and services, shifts in customer demands for products and services, entry of new market participants, opportunities presented by the envisioned rollout of both 4G and 5G technologies and the growing trend in the number of partnerships between players in the market space present BoFiNet with opportunities to leverage upon. This can drive the achievement of our objectives by stimulating growth of the industry and demand for connectivity. The developments in the core backbone across the country has placed the company as an ideal partner for providing transit connectivity to neighboring countries (Zambia, Zimbabwe, Namibia and South Africa) and a strong regional contender.

CEO’s Statement (continued)

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Retention of international capacity that runs on the EASSY, WACS and EIG optical fibre sub-marine systems to Points of Presence (PoPS) in South Africa, Djibouti and London strategically positions the company to be more competitive. This has informed the decision of the company to explore other strategic locations regionally and internationally towards diversification of traffic in line with customer requirements.

Operating in a highly liberalized and competitive telecommunications environ-ment, both locally and internationally, presents challenges for the company. Local, regional and international players licensed to play in both the wholesale and retail space and the envisaged growth in the licensing of other regional and international players bring direct competition for BoFiNet in the National Leased Line (NLL) in the transit market segment.

High backhaul costs and the rapid changes of the technology used in delivering telecommunication products and services present a challenge for the company. While it would be desirous for BoFiNet to develop and implement a cost leadership and best cost-provider strategy in line with its commitment to providing affordable and accessible broadband services, the high costs associated with operating and managing the expansive fibre infrastructure impede such a strategy. However, BoFiNet remains resolute in providing customers with high quality, affordable and accessible broadband services and products. In this regard, other supplementary strategies were implemented. These include strategic alliances, aggressive marketing and stakeholder relationship building and initiatives, to reinforce the BoFiNet brand recognition, effectively utilizing its infrastructure, human resources as well as ensuring that the OSS/BSS system achieves its efficiency levels.

Focus AreasThe above market dynamics and competition quizzes the company to act more towards the implementation of the current strategy. Preamble to this direction is the need to graduate from Government support to attain self-sustainability. Commercialization and utilization of the deployed infrastructure remain a priority moving forward. The company will endeavor to explore further, opportunities for lucrative commercial undertakings in the regional markets. This hinges on the already established strategic partnerships and the advantage that comes with these relationships. There is also the need to review and develop some of the product and services offerings in line with the market trends.

BoFiNet has commenced a project on local content infrastructure deployment for IPTV to stimulate uptake. This will be on the priority list going forward. There will also be concerted efforts to explore opportunities in the cloud services.

Coupled with the development of local content will be intensified rollout of public Wi-Fi to achieve the company’s strategic goals of universal broadband access and connectivity. Initiatives like formation of partnerships with strategic players in the market space will be intensified with the goal of taking affordable internet to the people.

Optimization of the service delivery process is underway, with the objective of automating the process to facilitate operability of the customer portal and online tracking of customer orders, enhancement of reconciliations and billing systems.

Mr Mabua Lesego MabuaChief Executive Officer

Total Wi-Fi Connections

92.2%ˆ

increased from 50,767 to 97,565

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Executive Management

01

02

0304

05

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01. Mr Mabua Lesego Mabua Chief Executive OfficerChief Executive Officer Mr. Mabua Lesego Mabua joined BoFiNet in August 2013 as the Chief Executive Officer after being in the Ministry of Transport and Communications since 2005. He joined the Ministry as a Director of Telecommunications and Postal Services and rose through the ranks of the Ministry as the Deputy Permanent Secretary of ICT before being elevated to the position of Permanent Secretary. Two years later, he was appointed to the position of National Coordinator of the Information Communications Technology (ICT) industry. Mabua is a graduate of University of Essex from the United Kingdom. He started his career as a graduate engineer at Botswana Telecommunications Corporation (BTC) in 1992. He left BTC at senior management level as a Chief Engineer after 12 years of employment. Mabua is experienced, knowledgeable and exposed to the ICT industry. He has led the formulation and implementation of several ICT initiatives in the country at different levels. Some of the examples include; the international connectivity, national core infrastructure, rural connectivity and the e-Government strategy.

02. Mr. oaitse Gabadirwe Corporate Services ExecutiveMr. Oaitse Gabadirwe is the Corporate Services Executive and oversees Finance, Human Resources, Regulatory Affairs and Compliance and Commercial (Procurement, Outsourcing and Legal) divisions. He holds a Bachelor of Commerce (Accounting) Degree from University of Botswana, is a Chartered Management Accountant with Chartered Institute of Management Accountants (CIMA) and holds an MBA from the University of Derby through Botswana Accountancy College. Prior to joining BoFiNet Mr. Gabadirwe worked for Botswana Examinations Council (BEC) as Finance Manager and was elevated to the position of Director Corporates Services from Mid-2012. He was also the Finance Manager at National Food Technology Research Centre in Kanye, after serving as a Business Consultant,

targeting SMMEs for a period of three years. Oaitse Gabadirwe also served in Botswana Defense Force for 11 years where he worked as a Finance Officer. Oaitse is Alumni of University of Stellenbosch Executive Development Programme attained in December 2016.

03. Mr Thato JensenCommercial ExecutiveMr. Thato Jensen, the Commercial Executive, overseeing and providing direction on the functions of business development, sales, public relations and marketing communications and commercial contracts. Mr. Jensen set up Strategy and Business Development Division, which was later, re-named Commercial. Key mileposts that underpin the initial efforts towards the commercialization of BoFiNet under his leadership portfolio covers the following highlights. The development of the Strategy and Performance Management Framework and System, which became the building block for the development of the first BoFiNet Corporate Score Card and three-year strategy. Under his direction, the business developed and launched its first wholesale products and services to the market coupled with reduction of prices. This stimulated significant market shift, and activation of new market participation. Prior to this position, he was Director of the Corporate Planning Division at the Local Enterprising Authority (LEA). He previously was Public Policy Analyst at LEA. Mr. Jensen holds a Masters of Arts in Governance and Development and a Bachelor of Arts in Social Sciences Degree.

04. Mr. Keabetswe segole Project Management ExecutiveMr. Keabetswe Segole is the Project Management Executive at Botswana Fibre Networks (BoFiNet). In this role, he works with a team of highly skilled Project Managers in managing BoFiNet’s strategic projects and BoFiNet customers’ projects including the Government of Botswana. In his candid assessment of all projects he has delivered, he considers the establishment of BoFiNet as his flagship project after delivering it

successfully between April 2012 and August 2013. Keabetswe has 24 years’ experience in the ICT industry, 14 of which were at Executive Levels within various organizations. Prior to joining BoFiNet, he worked for Botswana Telecommunications Corporation and Orange Botswana as Group General Manager for Technology and Chief Technical Officer respectively. In both organizations he delivered key strategic projects and exemplified leadership qualities, as a result he got assigned special responsibilities amongst them being; July 2011. Acting Chief Executive Officer for Orange Botswana from January 2007 to April 2007 and Acting Chief Executive Officer for Botswana Telecommunications Corporation from February 2010 to July 2011. Mr Segole is an Alumni of University of Stellenbosch Executive Development Programme through the University of Stellenbosch Business School. He is a certified PRINCE2® Practitioner.

05. Mr. Mpho KooleseActing Technical Executive Mr. Mpho Koolese was the Acting Technical Executive responsible for the strategic leadership of the BoFiNet Technical Division responsible for Technology Planning, Core, Access and Transport Systems, IP & Data Networks IT and Billing. Mr. Koolese was instrumental in setting up the BoFiNet Technical Division under the project that was mandated with setting up BoFiNet in 2013, seconded from BTC. He went on to be employed as the BoFiNet Chief Engineer Technology Planning since 2013. His experience in the telecommunication industry spans over 18 years of which he has spent planning and delivering large and complex technology projects of which a significant number have been National projects. Mr. Koolese has held various management positions and prior to BoFiNet, he was the Manager of Global Connectivity at Botswana Telecommunications Corporation. Mr. Koolese holds a HND, Electrical & Electronics Engineering from the University of Botswana and a Diploma in Telecommunications from City & Guilds.

23



For the FY2017/18 financial year, BoFiNet embarked on a number of key strategic projects that aimed at modernizing the network, increasing reach and improvement in internet connectivity.

Projects Overview

Strategic Infrastructure Projects

International Connectivity Projects

Mamuno to Swakopmund Optic Fibre project: The projects covered both Local and International connectivity with majority installations on Fibre.

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It passes through other towns in Namibia like Arandies, Vergeloge, Usakos, Karibib, Okahandja, Finkenstein airport, Windhoek, Ferk, Witvlei, Gobabis and Buitepos. Paratus Telecom implemented the project in partnership with BoFiNet. The project commenced in September 2017 targeted completing by April 2018.

Ngoma to Sesheke Optic Fibre ProjectThe project entails the supply, installation and commissioning of underground optic fibre reticulation within the built up environment of Ngoma (Botswana) to Sesheke (Zambia). The scope included the survey, planning, designing, installation and commissioning of the active equipment network in the defined route in order to establish connectivity of voice and data traffic to provide ICT services between Ngoma and Katima Mulilo, connecting to the already complete section between Katima Mulilo and Sesheke. The total distance of the fibre is 70km. The contract was a tripartite agreement between Paratus Telecomm of Namibia, BoFiNet (Botswana) and Zesco of Zambia. The project commenced in June 2017 and completed in October 2017.

National Backbone Projects

Bobonong Fibre ReticulationThe project faced delays due to re-tendering for the optic fibre deployment contract, which also resulted in a delay in the deployment of FTTx infrastructure. The project was completed in June 2017, and the event to mark its official closure and handover of the CSI benefit to the community was targeted and delivered in 11th July 2018 in Bobonong.

Fibre-To-The-X Phase 2Building onto the foundation laid by the deployment of FTTx infrastructure in Gaborone, Francistown, Kasane and Maun, the second phase of the project sought to deploy the technology to previously underserved areas. The deployment covered the areas of Serowe, Palapye, Lobatse, Mogoditshane, Selebi-Phikwe, Bobonong and Tsabong. The deployment also included the areas of Gaborone and Francistown. In keeping with the initial deployment of the technology, the second phase also targeted Government institutions, retail users, commercial and economical areas. The contract was awarded to Huawei Technologies for equipment and services, while local contractors were awarded the civils, cables and installation of the equipment under BoFiNet’s supervision. The project is complete in all areas, and the network is in operation and commercialized.

Botswana Post Wi-Fi Network DeploymentBotswana Post has collaborated with BoFiNet in revamping Poso Cloud, which offers a reliable, faster and affordable bouquet of internet solutions for individuals, businesses and Government through Botswana Post’s vast Service Delivery Channels. The first phase of the project offers Poso Cloud Hotspots at 35 branches, accessible through vouchers purchased at any of the Post Offices nationwide and used within the Wi-Fi coverage in these Post Offices. The Poso Cloud Hotspots are now active at the 35 branches across the country and at shopping malls where there are BoFiNet Wi-Fi Hotspots (Botswana Hotspots). These locations comprise of high traffic areas such as shopping malls, hospitals and airports, at the 35 post offices across Botswana. The second phase of the project will offer Poso Cloud Hotspots at additional 30 branches nationwide.

The scope included the survey, planning, designing, installation and commissioning of the active equipment network in the defined route in order to establish connectivity of voice and data traffic services between Namibia and Botswana. This cable enables BoFiNet to connect directly to the WACS Cables at a landing station in Swakopmund.

Charles Hill to Swakopmund optic fibre

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The company continues to implement a robust proactive maintenance plan and has continued implementing various interventions aimed at improving the set performance target of 99.9%.

Service Availability

The consistency in attaining set targets for service availability throughout the year indicate that the network has now reached stability. Following the installation of additional fibre routes, continuation on upgrading of backup power systems and further investments in green power (renewable energy) in some remote parts of the country has significantly improved services availability from 99.92% in the previous year to 99.94%. This has ensured that our clients enjoy uninterruptible services leading to business continuity and lowered operational costs.

Network Operations

26



In addition, the second and last phase of air conditioning unit’s replacement was undertaken. This provided efficient cooling in all our sites thereby improving service availability and minimizing service interruptions.

Fibre Cuts Management The major challenge in the past year has been frequent fibre cable breaks/ cuts predominantly caused by construction work on major infrastructure development projects. Some isolated incidents involve vandalism. The continuous engagement of stakeholders for purpose of infrastructure relocation ensure minimal interruption to service as a means to managing the situation.

Response to FaultsHaving achieved stability in our network, the focus is now on optimizing the infrastructure and human capital to improve further on our turnaround time and reduction of the mean-time to faults repair. The company continues to operate nine (9) strategically located Service Stations to facilitate service delivery and maintenance functions to ensure high network availability and quicker response to fault resolution achievement. BoFiNet augments the response time through an outsourced installation and maintenance business model.

The proactive maintenance programs completed in the past year include infrastructure improvement of power through the deployment of Standby Generators.

The services also include site cleaning and the up keep of sites. The company embarks on a socio-economic, citizen empowerment and corporate citizen drive through the engagement of local contractors and communities for the outsourced services.

Network SecurityBoFiNet is Botswana’s National Critical Information Infrastructure (NCII) as it provides and operates world-class telecommunications infrastructure that drives connectivity to the internet. This infrastructure is however susceptible to the diverse and ever-evolving cybersecurity and information security threats. In this regard, BoFiNet has taken a decision to develop an Enterprise Security Framework (ESF) that will help mitigate both cybersecurity and information security risks.

The BoFiNet ESF will provide to the Executive Management and Board of Directors enough visibility into the security threat landscape of BoFiNet while driving the risk profile of the organization. Its implementation will provide a platform to collaborate with other organizations to better combat cybercrimes in Botswana and the entire world. Service providers will be required to meet certain security requirements in order to be considered for providing technology services to BoFiNet. These requirements are checked at procurement stage, project management and throughout the support lifecycle of the provided service.

In developing the BoFiNet Enterprise Security Framework, the Company took an approach of tailor making the security framework by benchmarking on widely used security standards namely; ISO/IEC 27001: 2013, the NIST Cyber Security Framework version 1.0 and the Center of Internet Security Critical Security Controls for Effective Cyber Defense version 7.

27



BoFiNet continues to embark in network expansion activities to broaden connectivity and inclusion of a significant number of localities to connect to the digital information environment.

Network Development

Local Network Expansions

28



Wi-Fi ExpansionBoFiNet has installed carrier grade Wi-Fi network covering some sites/facilities in Gaborone, Palapye, Serowe, Mahalapye, Francistown, Maun and Kasane to provide public hotspots in 34 sites. These sites include locations such as hospitals, major shopping centres, stadiums, airports and public transport/ bus ranks. BoFiNet has stimulated Wi-Fi reach through the development of Wi-Fi based products and service including VALUE-ADDED-SERVICES. Some of the products include premises Wi-Fi and Events Wi-Fi. In addition, a sales drive to increase the momentum of Premises Wi-Fi uptake and indirectly expand Wi-Fi coverage has created a significant level of interest. This results in identified potential for growth of broadband penetration.

Premises Wi-Fi is a service that allows estate owners / tenants to deploy a W-Fi infrastructure within their buildings or estates through Internet Service Providers (ISP). This expands the Wi-Fi infrastructure availability.

BoFiNet undertakes to plan and install the infrastructure on behalf of their clients and bill ISP over an extended contractual period. The ISP manage the relations with their customers and BoFiNet continues to drive its mandate of infrastructure development and facilitation of ICT growth and access to knowledge. The service is designed to make the installation affordable to the ISPs with an expectation to pass the benefits to the end consumer.

Backbone/Backhaul ExpansionsThe Government desires that high capacity national networks be deployed, even to rural and underserved areas to connect those communities to the digital highway network infrastructure and close the digital divide. In line with our mandate of providing unfettered access to telecommunications services for all, BoFiNet has expanded its fibre backbone/backhaul network coverage by adding additional three villages to make a total of 203 towns and villages with BoFiNet high-speed broadband connectivity.

To date, BoFiNet has over 9200Km of fibre infrastructure covering the entire country designed as a mesh network for availability of services in the event of fibre cuts, mainly the DWDM equipment used, offering 40 wavelengths of 10Gb each capacity.

203 towns and villages with BoFiNet high-speed broadband connectivity.

The objective to the attainment of an inclusive digital economy has received a fair share of investments with extensive expansions geared towards connecting and closing the digital divide between urban and rural development.

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Local Network Expansions (continued)

9200km of Fibre

30



Local Network Expansions (continued)

FIBRE BROADBAND IS NOW AVAILABLE ON THIS PREMISES

up to

Mbps300

PLEASE CONTACT YOURINTERNET SERVICE

PROVIDER (ISP)

BoFiNet continues to expand its Fibre-To-The Business initiatives to revolutionize access to broadband services. Additional seven towns and villages were covered which are; Lobatse, Mogoditshane, Tsabong, Bobonong, Serowe, Palapye and Selibe Phikwe, to make a total of eleven. A total of 2120 buildings have been connected to this high-speed technology, with some customers enjoying up-to 300Mb/s bandwidths. To indicate buildings with broadband access, the sign below shows exactly what the building has to offer in terms of speed.

Fixed Broadband Wired Access (using FTTx)

Fixed Broadband Wireless Access (using Point to Multi-Point Radio) BoFiNet has invested in a fixed broadband wireless access technology to compliment the FTTX for broadband access. This network was rolled out to 45 villages and towns around the country. This has improved broadband penetration among the business segment of the market and government facilities.

Geographic Information System (GIS)Geographical Information System (GIS) was implemented. This is a mapping platform, which provides visibility of the network infrastructure through geographic coordinates.

Through GIS, we are able to produce network maps and therefore provide full management of the access network infrastructure. In addition, this has expedited customer installation and quicker identification of faults within the network. The impact is quick response and shorter timelines towards service restoration. With the system, we are now able to share location information of our infrastructure with other stakeholders such as, Roads, Water and Electricity Utility providers for easy identification during constructions, to avoid service disruptions. A value add to the service is the potential to provide self-service to customers to improve efficiency in provision of service.

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BoFiNet maintains to implement strategic objectives towards improvements in global connectivity to benefit the local market and explore opportunities to participate in the regional and global market.

International Connectivity

The investments made towards international connectivity span over USD47 Million. These warrants rigorous focus of efforts to create value for the shareholders. BoFiNet manages regional and international routes through which traffic moves in and out of Botswana. The developments in international connectivity has resulted in the increase of traffic as more users onboard and utilize the services.

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The internet connectivity PoPs (Points of Presence) allowing access to content, are numerous. This allows for a high speed, network with redundancy (alternate routes) that creates stable and reliable connections.

Submarine Cable SystemsBoFiNet has direct investments and connectivity to EASSy and WACS undersea cables landing on the East and West coast of Africa. Direct access to other various cables is also possible through collaborations with other operators where the cables share Landing Stations.

The growth of undersea cable market continues to experience intensive investment and upgrades. Investments in the submarines cables is mainly due to various reasons such as to improve route diversity, the quest to reach new markets, improving existing cables among others. Continued growth in developments of new cable systems and investments towards upgrade results in an oversupply of bandwidth in the market. This caused intense competition and price wars in the wet segment as participant’s attempts to dump capacity through offering extremely low prices to any takers. Investors have been forced to be more innovative and find alternative methods of augmenting the loss of revenue so that they do not succumb to pressure of falling prices.

BoFiNet has maintained its stakeholder position in the two cable systems WACS and EASSy. The company continues to participate in investments towards capacity upgrades. The upgrades have more than tripled the existing capacities in both (WACS and EASSy). Capacities in 2018/19 will stand at 632 STM1s (97,960Gbps) and expecting about 200Gbps by end of November 2018 for WACS. EASSy capacity after the recent upgrade provided BoFiNet with 1332 STM1s (206,460Gbps). The cables are essential in providing route diversity and redundancy as well as bringing in international content in a landlocked Botswana. WACS and EASSy also provides international connectivity for our clients who desire to connect with the rest of the world.

BoFiNet is an investor in EASSY and WACS undersea cable systems

BoFiNet connects to the

world via terrestrial links

through Namibia and

South Africa and the

onward routes connect

through undersea cables

both terminating in

London.

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International Connectivity (continued)

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BoFiNet Global Points of Presence

Internet

Swakopmund

International PoP

Landing Station

PoP Router

Cogentl

Cape Town

Mtunzini

Gaborone

MSU1 MSU2

Francistown

Djibouti

Maun

Joburg

TeracoSAIX

Yzerfontein

Internet

LiNXPeering

Peering

EASSY

WACS

London (Global Switch)

BoFiNet provides internet capacity through various regional and international Points of Presence (POPs). This provides diversification and access to high quality content, enabling impeccable customer experience. BoFiNet has established Pops in the following locations.• International PoPs: South Africa

(Terraco - Johannesburg and Cape Town), Djibouti and London, (Global Switch) and Namibia (Swakopmund)

• Internet Exchanges: LondonInternet Exchange (LINX), Johannesburg Internet Exchange (JINX), NAP Africa (Johannesburg) and Botswana Internet Exchange (BINX).

Plans are underway to relocate Djibouti PoP to Kenya (Nairobi) to access the East Africa traffic.

Internet Connectivity and Global Points of Presence (Pops)

35



International Connectivity (continued)

Regional Backhaul Connectivity

Connectivity to the undersea cables BoFiNet has collaborated with Telecom Operators in neighboring countries to connect to the submarine networks and to regional Data Centres. Significant investments have been made in both Namibia (125Gbps between Gaborone and Swakopmund) and South Africa (in excess of 300Gbps capacity by end of 2018 between Gaborone and Johannesburg). In addition, the network is dimensioned to provide diversity of cross-border points. This network routes diversity extends towards both the Submarine Cable Landing Stations and the Data Centres.

BoFiNet partners with other Telcoms operators and Data Centers to enhance terrestrial links and expansion of capacity into the country and region. The networks are dimensioned to provide diversity of cross-border points.

Cross Boarder Connectivity - Local exit PointsThe company has been able to establish multiple exit routes through the various border posts with neighboring countries.

The multiple route provides diversification of traffic in and out of Botswana across the region and internationally towards the undersea cables and beyond. The interconnection with various partners in neighboring countries has made this possible. An opportunity to provide transit services through Botswana utilizing the high capacity backbone has been identified. The target market is customers that want to pass traffic between various countries in a secure, fast and stable network.

Country Exit Points

South Africa Ramatlabama, TlokwengZimbabwe RamokgwebanaZambia Kazungula, Ngoma-Katima-Sesheke Namibia Charles Hill, Ngoma

Regional Connectivity

Multiple exist routes provide traffic redundancy and Transit service to any neighboring boarders.

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Infrastructure expansion has led to growth in Internet traffic due to increase in traffic usage.

Internet Traffic and Content Growth

The ample capacity providing access to connectivity countrywide coupled with public awareness campaigns on the availability of the network and its capability has raised interest and overall use.

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The following IP traffic patterns indicate the growth patterns of the usage of the infrastructure from 2.5 Gbps in 2014 to 20Gbps in 2017/18. This is almost eight (8) Times in a period of 3 years.

BoFiNet continues to play an imperative part in the growth of ICT in the country.

The size of content reached up to 420 TiB (titibytes or terabytes) in 2017. The greatest driver of internet was social media and this growth is anticipated to continue with the same trajectory in the coming years. It is apparent that participation in the content space is undeniably unavoidable if telecommunications operators want to create value by attracting more customers. In this regard, it is imperative for BoFiNet to consider contribution to the content space to increase the usage of the vast network deployment and optimize investments made. This will greatly benefit the citizens of the country by creating an enabling environment for growth in various economic activities.

Util

isat

ion

(GBP

S)

2014 2016 2018 - May2015 2017 2018 - June

5

10

15

20

25

0

YearLondon RSA TOTALLocal Content (Akamai+Google+Facebook)

002

1.422.43 2.323.5 3.3

2.05

7.71

5.57 5.33 6.06 6.55

4.39 4.67

11.39

9.09.61 9.92

21.1420.32 20.26

IPT Traffic 2018 (Gbps)

420TiBˆ

Size of content reached up to

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BoFiNet continues to focus on market driven products and services. These are provided through the extensively developed infrastructure to serve the local ,regional and international market.

Products And Services

National Lease Line (NLL)

NLL is a domestic dedicated (point-to-point) connection that provides a secure tunnel between two locations within the country. This is suitable for supporting dedicated point-to-point, ring and linear network topologies. It allows service providers to pass content of their choice (Internet, Data, Voice, Videos) by accessing the BoFiNet national network.

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NLL provides capacities up to STM64. The BoFiNet network is based on a meshed topology, which provides alternative traffic routes thus providing an ample redundancy and high service availability.

Internet Protocol Transit (IPT)IPT allows network traffic from an Internet Service Provider (ISP) to inter-connect to the internet core through accessing BoFiNet’s IP backbone for premium uncontended blend of regional and international content. BoFiNet IP backbone which provides internet is fully protected with redundant links nationally and internationally running through dual undersea cables (WACS and EASSy) entering Botswana through multiple inland routes via a router. IPT is available in E1 (2Mbps), E3 (34 Mbps), DS3 (45 Mbps), STM 1 (155 Mbps), STM 4 (622Mbps), STM 16 (2.4 Gbps), STM 64 (10 Gbps).

International Private Lease Circuit (IPLC)An IPLC is a point-to-point private line used by an organization to communicate between its geographically dispersed offices throughout the world.

National Leased Line (NLL) service is a committed high-speed bandwidth service, which runs on a WDM (Wave Division Multiplexing) platform (usually DWDM) or SDH (Synchronous Digital Hierarchy) technologies.

BoFiNet utilizes the international connectivity via the undersea cable to provide international IPLC connectivity. The regional and terrestrial links through the multiple country exit points and interconnection with neighbouring countries are used to provide IPLC services. The multiple routes and PoPs provide redundancy and protection of traffic.

IPLC supports a wide variety of applications including internet access, LAN-to-LAN connectivity, telemedicine, video and teleconferencing through high quality reliable digital transmission seamlessly integrating data, voice and imaging services. BoFiNet IPLC is available in E1 (2Mbps), E3 (34 Mbps), DS3 (45 Mbps), STM 1(155Mbps), STM 4 (622 Mbps), STM 16 (2.4 Gbps), STM 64 (10 Gbps).

BoFiNet provides three (3) types of IPLC services.• Transit - From boarder to boarder within Botswana • Full Circuit - Through Botswana from

boarder to boarder and directly to a location outside Botswana using another carrier

• Half Circuit - From a location in Botswana to the boarder.

Wet SegmentsSince BoFinet owns a stake in the undersea cables (WACS and EASSy) as a consortium member, the company may lease this capacity to any service provider who requires it. Normally refered to as “wet capacity’, BoFiNet is able to provide lease of any portion along the route between any landing station from Swakoppond to London on the WACS and Mthunzini to London on EASSy cables respectively.

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Metro (Carrier Ethernet)Carrier Ethernet is a dedicated interconnection of two (2) or more points (Multipoint to multipoint) that performs complex routings on the network on behalf of the customer. This allows the sharing of information, applications, databases and LANs at several locations, with Private IP/ MPLS Networks. It represents a considerable reduction of operating costs, due to the possibility of integrating services and other applications in the same network.

Fibre LitePremium Shared internet over Fibre-To-The-X (FTTx) with End-to-end network configuration for controlled contention by BoFiNet directly to the end user. Available in 5Mbps, 10 Mbps, 20 Mbps and 40Mbps Fibre Lite is available; at a fixed monthly fee at minimum contract is 24 months. BoFiNet carries out the End-to-end service installation on behalf of Service provider up to the last BoFiNet equipment ONU (FTTX equipment). BoFiNet provides a 24/7 customer service-to-service users on behalf of their Service Providers. Fibre Lite is available through participating Service Providers and it is suitable for SMME customers currently due to the availability of the FTTx network .

ColocationA colocation (colo) is a datacenter facility in which an organization can rent space for servers and other telecommunication hardware. Typically, a colocation provides the building, cooling, power, bandwidth and physical security, space in the form of rack or cage. The BoFiNet colocation service is provided in the following form and options on a 5 or 10-year contract. The prices depend on the length of contract and location defined as Urban and Non-Urban• BoFi Colo - Renting a 3 x 3 meter space in a BoFiNet site.

• BoFi Tower - Renting space on a BoFiNet base station tower.• BoFi Colo-Colo - Renting rack space

within the main shelter equip with backup systems, power supply and air conditioning.

• BoFi Combo - Renting space on both the site and base station tower

Wi-Fi ServicesWi-Fi has become a common way to connect to the Internet for consumers and businesses worldwide. Its availability has become an expectation almost everywhere. To facilitate the market demand through our customer in meeting this expectation BoFiNet has developed the following Wi-Fi services available through the Wi-Fi deployed infrastructure. The Wi-Fi network is dependent on the national fibre infrastructure for backhaul support. The following are the available products and services based on the Wi-Fi technology.

Public Wi-Fi – Botswana Hotspots VouchersPublic Wi-Fi internet access provided within selected public locations countrywide. The Wi-Fi enabled locations are generally referred to as ‘hotspots’. The current hotspots are located in hospitals, shopping malls, bus ranks/stations. The Public Wi-Fi is a white labelled packaged data bundles sold on wholesale to Service Providers. ISPs brand and price the data bundles to consumers as a prepaid service in voucher forms. These may be physical cards or virtual electronically generated pin vouchers from Point of sale machines. The prices for the market are approved via BOCRA once the ISPs have submitted the proposals and met the requirement set by the Regulator. The data bundles allow fast internet connectivity for browsing, access to email, social media, research and any other information on the internet. The following are the wholesale prices for the various data bundles available to ISPs from BoFiNet.

Products And Services (continued)

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Infrastructure Lease (SSID)This is a service that allows ISPs to lease the Wi-Fi infrastructure where it is available countrywide. This allows the ISP to develop own tailored services if they have the platforms to do so. The service is designed for customers with their own billing platform. The Wi-Fi infrastructure can also be used for mobile data traffic offload.

This releases network resources to improve the quality of service through reduced traffic congestion. The customer obtains an SSID (Service Set Identifier) which is a name of the Wi-Fi that appears on the list of Wi-Fi wherever the customer has selected a presence. The service is leased monthly according to the agreed contract period option selected.

Event Wi-FiA wireless internet service deployed at events by BoFiNet and resold by an ISP to event organizers or venue owners to allow attendees to utilize the internet FREE. This is a temporary connection at an event. BoFiNet is responsible for the setup and management throughout the duration of the event on behalf of the service provider. Permanent infrastructure is available at certain locations such as the (National stadium, Francistown stadium, UB Arena, Ditshupo Hall). The deployment of service requires feasibility and cost assessment The events Wi-Fi has stimulated demand in the following business areas: workshops, camps, conreferences, and exhibitions.

Premises Wi-FiA wireless internet service deployed in buildings or multitenant locations such as office blocks, multi residential block of flats or a business location. BoFiNet is responsible for the setup and an ISP resells it to property owners or premises owners to allow residents of the building to utilize the service. It is best packaged to end users as a value add service offered free to the end users.

Data (MB) Price (BWP)

10 0,620 1,230 1,750 2,960 3,580 4,6100 5,8150 8,6200 11,5250 14,4500 28,81000 57,62000 115,3

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BoFiNet strives to be the employer of choice in the telecommunication industry.

Human Resources Report

Our aim is to provide the best opportunities for our people who will become our company ambassadors and drive our value proposition. Our aim is to develop the best crop of leaders who will take the business to greater heights and ensure that our talented staff is fully utilized to the best of their ability. Our approved structure has 137 positions filled. There are 36 additional temporary positions, 14 projects positions.

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A mix of talent and diversity in specialist skills and experience has built the capacity and competence to plan, develop, implement and manage the technologies that makes the building blocks of the robust BoFiNet network.

These skills have led to the success of the implementation of the many projects that result in the effective execution of the BoFiNet mandate.

BoFiNet embrace a culture of teaching and learning, emanating from transfer of knowledge across the different generations. The diversity in personality traits amongst staff rejuvenates and augment the pool of experience and adds incredible value to the organization. The result is an environment conducive for innovation, fast response and high-level delivery that yields good results. Our values continue to drive cohesion, excellence and delivery of work that is done with the highest integrity.

Health and safety is upheld in BoFiNet through a skilled health and safety department. To ensure a healthy workforce, we hold an annual wellness event where our staff participates in health and wellness education, and sporting activities during the day. This includes conducting tests for several none communicable diseases that can affect the employees’ daily life, health and general positive lifestyle tips and advice provided to encourage overall wellness. Activities that were developed to improve staff engagement, were held in the past financial year and these included, teambuilding, staff engagement surveys and meeting forums where staff concerns were raised and addressed. These initiatives have seen our staff turnover remaining well below industry standards of 6% and realizing improved communication between staff and leadership.

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BoFiNet embraces the principles of corporate social responsibility, which encourage a spirit of contributing towards sustainable development of the communities within which BoFiNet operates. Botswana Fibre Networks, emphasize on social investment and less charity.

Corporate Social Responsibility

We believe that the community and stakeholders are partners in developing a healthy and a stable socio-economic environment. Our social investment activities focus on the improvement of quality of life, access to knowledge, sports development and social inclusion initiatives. Our Corporate Social Responsibility (CSR) is about sustainability with the main thrusts leaning towards Education as a Corporate Social Investment.

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School Connectivity Knowledge is power. Information is liberating. Education is the premise of progress in every family and community. In our bid to facilitate access to knowledge, we have provided internet for the past five years to a number of schools across our country. We have taken a deliberate decision to infuse this key norm as one of the expectations by BoFiNet on contractors in ensuring that they leave a valuable legacy within the communities that they work in. In 2017, we ensured that the quality internet is accessible to schools by donating internet of 5Mbps speed to the following schools listed below for a period of one (1) year. This brings the total number of schools that have benefited for the

Based on the

aforementioned building

blocks, the following are

the initiatives that BoFiNet

has invested time, money

and energy on in the FY

2017/18.

‘BoFiNet Schools Connectivity’ initiative to 63 as at the end of the 2017_18 Financial year period. However an estimated total of 451 schools have benefited from the BoFiNet Schools Connectivity in collaboration with our strategic partners over this period.

Prize Giving InitiativesAt BoFiNet, we are not only enablers but also dream changers for Batswana Learners. Towards the end of 2017, we sponsored and attended Prize Giving Ceremonies at; Khawa Primary school, Kgomodiatshaba Primary School, Motsumi JSS (Letlhakane) and Dukwi JSS, awarding prizes to the best performers. We believe that these prize-giving ceremonies encourage learners to put in more effort in their schoolwork.

BoFiNet Community Service DayIn 2017, all BoFiNet employees spent a day with senior citizens (oldies) at Bontleng Futsal Park. The activities of the day included a cleaning campaign around and inside the park, exercising, and drawing wisdom through storytelling, playing traditional games like Dibeke, Chama, and hide and seek. BoFiNet employees dedicated that day away from their core business to serving Bontleng senior folks.

Name of School Location Capacity Duration

Masunga Primary School Masunga 5Mbps 1 year

Mosojane Primary School Masunga (9km) 5Mbps 1 year

Vukwi Primary School Masunga (3km) 5Mbps 1 year

Malambakwena Primary School Malambakwena 5Mbps 1 Year

Letsholathebe Primary School Letsholathebe 5Mbps 1 year

Gambule Primary School Gambule 5Mbps 1 Year

Masunga Senior School Masunga 5Mbps 1 Year

Maruje Junior School Masunga 5Mbps 1 Year

Matlapana Primary School Maun 5Mbps 1 Year

Khawa Primary School Khawa 5 Mbps 1 Year

Ledumadumane Primary School Mogoditshane 5Mbps 1 Year

New Look Primary School Lobatse 5Mbps 1 Year

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Outreach Program for under privileged ChildrenBoFiNet recognizes the increasing importance of investing in children, as they are the future of our country. For the past four years, we have been sponsoring certain charities that provide food, education and a loving and nurturing environment to underprivileged and orphaned children. We have been assisting the following charities; Kopong Charity Tournament, Masire Foundation and Tlokweng Social and Community Development (S&CD).

At BoFiNet, we believe that education is the key to uplifting the marginalized or disadvantaged communities and there is no better place to start than with the children, represent our future.

In partnership with Tlokweng S&CD we have taken under our wing about 20 children from the village of Tlokweng and provided then with an opportunity to education by finding then space at Boarding Schools and providing for their support. Although school dropout and misbehavior are some of the challenges experienced, there has been great improvement in some of the children at schools.

This has been observed through obtaining prices ranging from good behavior, academic excellence and sports.

In December 2017, we provided education excursions for thirty-five (35) vulnerable children who were living on the streets, school dropouts, and fifteen (15) adults by taking them in a boot camp to Dithope Game Reserve.

BoFiNet provided them with amenities whilst on the excursion which focused on rehabilitation through counselling, skills development, physical activities, motivational talks that addressed their undesirable behaviors.

SoftballBoFiNet has in the past year increased the softball league sponsorship from P1.5M to P1 650 000.00 during this year. This was stimulated by a growing interest in the sport by the public, which led to an increase in the number of teams. The growth attracted additional costs to cater for playing balls, officiating expenses, transportation and prize monies. BoFiNet believes that sports builds character, adherence to rules and regulations, healthy lifestyle which are the qualities for any growing nation. We still recognize our responsibility and impact through our involvement in sport. Over the years, we have taken a keen interest in the development and growth of the BoFiNet Softball League. We further extended our assistance to Primary school softball currently available in non-government schools. This has contributes to grooming of young softball players at the Diphala Sofball Masters.

Corporate Social Responsibility (continued)

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We have not only been confined to the softball league, in October 2017 BoFiNet pledged P500,000 worth of sponsorship towards the World Baseball Softball Conference that was held at GICC. BoFiNet provided fast internet at the conference, translation equipment, translation services, interpreters, water and shuttles for the conference delegates throughout the entire WBSC week.

International Working Group on Women and Sports (IWG)Over the past two years, we have been engaged in the development of select young women in sports In 2015/2016. BoFiNet collaborated with the International Working Group (IWG). The group adopted the Mentoring and Empowerment Programme for Young Women (MEMPROW) initiative, which was founded in Uganda as an ideal Programme to guide, and mentor girls in different sporting codes. The partnership brought girls and young women in sport aged between 14-18 years and provided them with the skills and knowledge they need to become successful, confident and self-reliant individuals.

A contract worth P437,325.00 over a period of three years from 2015/2016 financial year was signed with IWG to equip a minimum of ten (10) beneficiaries with skills in order to reach their full potential in sports. At BoFiNet, we believe that building a generation of informed and empowered young women is a catalyst for transforming gender relations. Within the two years, we supported their Youth Leadership Camps, which were meant among other things, to assist athletes manage their finances and help them focus on their goals. Throughout the years, we were looking at skills training, advocacy, movement building, research and documentation and counselling.

Environment In September 2017, BoFiNet supported and attended the Kalahari Conservation Society Annual Dinner Dance at GICC, where we celebrated environmental conservation in Botswana. Our aim was to help raise funds for environmental education, policy and conservation projects and to celebrate our natural environment in style.

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BoFiNet In Pictures

50



51



BoFiNet In Pictures

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Financial Statement

The mandate of the function is enshrined in BoFiNet Internal Audit Charter, which was approved in 2015. The Charter gives the function its mandate, powers and authority, duties and responsibilities as well as reporting responsibilities.

The Internal Audit Services is given the responsibility of providing assurance to the Board of Directors of Botswana Fibre Networks (Pty) Ltd and Management on efficiency and effectiveness of governance, risk and control processes. The function was established and started operations in March 2015.

Internal Audit Services for 2017/18 Annual Report

54



This is in compliance with best practice in

corporate governance as well as the Standards

governing the professional practice of internal

auditing.

In the year under review, Internal Audit

Services staff expanded by recruitment of the

IT/IS Auditor and the Internal Auditor. Other

notable improvements include automation of

the function, which encompasses acquisition

of an audit management and data analytics

software with full implementation to be

completed in the following financial year.

The Head of BoFiNet

Internal Audit Services

reports functionally to the

Board of Directors through

the Board Finance and

Audit Committee and

administratively to the

Chief Executive Officer.

The purpose for acquiring the software is to

improve efficiency and effectiveness of the

operations of Internal Audit Services.

The year also marked the separation of internal

audit and risk management functions into

two distinct departments. This was intended

to support the primary role of Internal Audit

Services over risk management, which is to

provide assurance that the risk management

framework of the Company is effective.

BoFiNet Internal Audit Services has, in line with

current trends and best practices, adopted a

risk-based approach in planning and executing

audit engagements since inception covering

the year under review and going into the future.

Due to the fast pace and impact of

technological changes in organizational and

internal audit operations, the function has

sought to exploit technology to improve

performance as indicated above.

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Country of incorporation and domicile Botswana

Nature of business and principal activities Providing wholesale national and international telecommunication infrastructure services

Directors Ratsela Mooketsi (Chairperson) Pauline Sebina Marvin Torto John Vassiliadis Malebogo Mpugwa Gadzani Thangwane Yolisa Phillips -Lejowa Lynette Armstrong Professor Shedden Masupe

Registered Office Plot 113, Unit 28, Kgale Mews, Gaborone International Finance Park, Gaborone

Bankers Stanbic Bank Botswana Limited First National Bank Botswana Limited Banc ABC

Auditors KPMG Chartered Accountants

Secretary Ms. Tshenolo Botshelo Moyo

General Information

56



for the year ended 31 March 2018

AnnualFinancial Statements

Directors’ Responsibilities and Approval

Directors’ Report

Independent Auditor’s Report

Statement of Financial Position

Statement of Profit or Loss and Other Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Significant Accounting Policies

Notes to the Financial Statements

The supplementary information does not form part of the financial statements and is unaudited:

Detailed Income Statement

58

59

60

64

65

66

67

68

81

94

57



57

The directors are responsible for the preparation of the annual financial statements of Botswana Fibre Networks (Proprietary) Limited which give a true and fair view, comprising the statement of financial position at 31 March 2018, and the statements of profit or loss and other comprehensive income, changes on equity and cash flows for the year ended, and a summary of significant accounting policies and notes to the financial statements, in accordance with International Financial Reporting Standards.

The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and for maintaining adequate accounting records and an effective system of risk management.

The directors have made an assessment of the ability of the company to continue as a going concern and have no reason to believe that the business will not be a going concern in the year ahead.

The auditor is responsible for reporting on whether the financial statements give a true and fair view in accordance with the applicable financial reporting framework.

Approval of the financial statementsThe annual financial statements of Botswana Fibre Networks (Proprietary) Limited, as identified in the first paragraph, were approved by the board of directors on 10 August 2018 and are signed on their behalf by:

Director Director

Directors’ Responsibilities and Approval

58



The directors report and the annual financial statements for the year ended March 31, 2018.

1. Review of activities Main business and operations

The company is engaged in providing wholesale national and international telecommunication infrastructure services and operates principally in Botswana.

The operating results and state of affairs of the company are fully set out in the attached financial statements and do not in our opinion require any further comment.

2. Events after the reporting periodThe directors are not aware of any matter or circumstance arising since the end of the financial year.

3. Authorised and issued share capitalThere were no changes in the authorised or issued share capital of the company during the year under review.

4. DividendsNo dividends were declared or paid to shareholder during the year.

5. DirectorsThe directors of the company during the year and to the date of this report are as follows:

NameRatsela Mooketsi - ChairpersonPauline SebinaMarvin TortoJohn VassiliadisMalebogo MpugwaGadzani ThangwaneYolisa Phillips -LejowaLynette ArmstrongProfessor Shedden Masupe

6. SecretaryThe secretary of the company is Ms. Tshenolo Botshelo Moyo.

Directors’ Report

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KPMG, Chartered AccountantsAuditPlot 67977, Off Tlokweng Road,Fairgrounds Office ParkP O Box 1519, Gaborone, BotswanaTelephone +267 391 2400Fax +267 397 5281Web http://www.kpmg.com/

Independent Auditor’s Report

To the Members of Botswana Fibre Networks (Proprietary) Limited

OpinionWe have audited the financial statements of Botswana Fibre Networks (Proprietary) Limited (“the company”) set out on pages 64 to 93, which comprise the statement of financial position as at 31 March 2018, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement cash flows for the year then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of Botswana Fibre Networks (Proprietary) Limited as at 31 March 2018, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.

Basis for OpinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

KPMG, a partnership domiciled in Botswana and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity

Partners: AG Devlin* NP Dixon-Warren FJ Roos** G Motsamai *British ** South African VAT Number: P03623901112

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Work-in-progress projectsRefer to note 1.3 and note 2.

Key audit matter How the matter was addressed in our audit

The carrying value of the company’s capital work in progress amounted to P147 million (2017: P115 million) at the reporting date. This constitutes 8% of the company’s total assets.

The capital work-in-progress relates to costs incurred on ongoing projects. The entity has numerous significant projects running at any given point in time, with 21 open projects at the reporting date.

Due to the nature and volume of transactions and the work effort involved in determining whether the costs capitalised are assets in nature, this was considered a key audit matter.

Other InformationThe directors are responsible for the other information. The other information comprises General Information, the Directors’ Report, the Directors’ Responsibilities and Approval statement and the Detailed Income Statement. Other information does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial StatementsThe company’s directors are responsible for the preparation of financial statements which give a true and fair view in accordance with International Financial Reporting Standards, and for such internal control as the directors determine is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Our procedures included:• We evaluated the design and

implementation of controls relating to the review of the capital work-in-progress reports, which includes consideration of the allocation of costs.

• We evaluated the accuracy andappropriateness of the allocation of costs to open work-in-progress jobs at the reporting date by agreeing these costs to supporting documentation on a sample basis.

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In preparing the financial statements, the directors are responsible for assessing the company’s’ ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.

62



• Evaluate the overall presentation, structure and content of the financial statements,including the disclosures, and whether these financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

KPMGCertified AuditorsPracticing member: AG Devlin (19960060)20 August 2018Gaborone

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Statement of Financial Positionas at March 31, 2018

2018 2017 note(s) P P

AssetsNon-Current AssetsProperty, plant and equipment 2 1,501,676,742 1,427,548,452Investment in shares 4 5,882,353 5,882,353 1,507,559,095 1,433,430,805

Current AssetsInventories 5 16,872,435 17,060,648Trade and other receivables 6 99,075,659 123,288,961Cash and cash equivalents 7 198,875,835 105,021,200 314,823,929 245,370,809Total Assets 1,822,383,024 1,678,801,614

Equity and LiabilitiesEquityStated capital 8 747,244,423 747,244,423Reserves 9 826,229,837 732,111,696Accumulated loss (119,756,274 ) (91,511,677 ) 1,453,717,986 1,387,844,442

LiabilitiesNon-Current LiabilitiesOther financial liabilities 10 4,072,152 4,653,888Deferred revenue 12 180,116,417 136,907,391Deferred tax 3 69,434,259 32,764,505 253,622,828 174,325,784

Current LiabilitiesOther financial liabilities 10 581,736 581,736Finance lease obligation 11 — 213,464Trade and other payables 14 71,089,182 80,136,188Deferred revenue 12 37,095,487 35,700,000Government Data Network 13 6,275,805 — 115,042,210 116,631,388Total Liabilities 368,665,038 290,957,172Total Equity and Liabilities 1,822,383,024 1,678,801,614

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Statement of Profit or Loss and Other Comprehensive Incomefor the year ended 31 March 31 2017

2018 2017 note(s) P P

Revenue 15 321,528,378 307,918,726Cost of sales 16 (173,922,693 ) (162,384,590 )Gross profit 147,605,685 145,534,136Other income 17 18,928,968 18,150,487Operating expenses (160,154,252 ) (145,140,398 )Operating profit 6,380,401 18,544,225Finance income 18 2,522,716 1,374,477Finance costs 19 (477,960 ) (1,574,375 )Profit / (loss) before taxation 8,425,157 18,344,327Taxation 20 (36,669,754 ) (39,610,383 )Profit / (loss) for the year (28,244,597 ) (21,266,056 )Other comprehensive income — —Total comprehensive (loss)/income for the year (28,244,597 ) (21,266,056 )

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Statement of Changes in Equityfor the year ended 31 March 31 2017

share Funding Accumulated Total capital Reserves loss equity P P P P

Balance at April 1, 2016 747,244,423 677,455,569 (70,245,621 ) 1,354,454,371Loss for the year — — (21,266,056 ) (21,266,056 )

Total comprehensive Loss for the year — — (21,266,056 ) (21,266,056 )Government funding — 82,726,875 — 82,726,875Amortisation of Government Grant — (28,070,748 ) — (28,070,748 )Total contributions by and distributions toowners of company recognised directly in equity — 54,656,127 — 54,656,127Balance at April 1, 2017 747,244,423 732,111,696 (91,511,677 ) 1,387,844,442Loss for the year — — (28,244,597 ) (28,244,597 )

Total comprehensive Loss for the year — — (28,244,597 ) (28,244,597 )Government funding — 126,886,812 — 126,886,812Amortisation of Government Grant — (32,768,671 ) — (32,768,671 )Total contributions by and distributions toowners of company recognised directly in equity — 94,118,141 — 94,118,141Balance at March 31, 2018 747,244,423 826,229,837 (119,756,274 ) 1,453,717,986

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Statement of Cash Flowsfor the year ended 31 March 31 2017

2018 2017 note(s) P P

Cash flows from operating activities

Cash generated from operations 23 142,385,646 59,687,864Finance income 2,522,716 1,374,477Finance costs (477,960 ) (1,574,375 )Net cash from operating activities 144,430,402 59,487,966

Cash flows from investing activities

Purchase of property, plant and equipment 2 (182,943,184 ) (264,533,769 )

Cash flows from financing activities

(Decrease) in other financial liabilities (581,736 ) (581,736 )Increase/(decrease) in Government Data Network liability 6,275,805 (158,682,479 )Decrease in finance lease payments (213,464 ) (1,823,725 )Government funding 24 126,886,812 82,726,875Net cash from financing activities 132,367,417 (78,361,065 )

Total cash movement for the year 93,854,635 (283,406,868 )Cash at the beginning of the year 105,021,200 388,428,068Total cash at end of the year 7 198,875,835 105,021,200

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Significant Accounting Policiesfor the year ended 31 March 31 2017

1. Presentation of financial statementsBotswana Fibre Networks (Proprietary) Limited is a company domiciled and registered in Botswana under the Companies Act, 2003. The financial statements represent the company’s statutory financial statements. The financial statements have been prepared in all material aspects with International Financial Reporting Standards. The financial statements have been prepared on the historical cost basis except where otherwise stated and incorporate the principal accounting policies set out below.

These accounting policies are consistent with the previous year except where otherwise stated. The financial statements are presented in and rounded to the nearest Pula which is the functional currency.

These financial statements were approved by the board of directors on 10 August 2018.

1.1 Significant judgements and sources of estimation uncertaintyThe preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimated and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results which for the basis of making the judgements about carrying values of assets and liabilities that are not readlily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis and relate mainly to the evaluation of trade and other receivables for possible impairment, assessment of residual values and depreciation rates applied to property, plant and equipment items and calculation and recognition of income and deferred taxation. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.

1.2 Property, plant and equipmentProperty, plant and equipment is initially measured at cost. Costs include costs incurred to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add, to replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of plant and equipment, the carrying amount of the replaced part is derecognised.

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Where parts of an item of plant and equipment have different useful lives, they are accounted as separate items of plant and equipment. The company recognises in the carrying amount of an item of plant and equipment the cost of replacing of such an item when the cost is incurred, it is probable that future economic benefits embodied with the item will flow to the company and the cost of the item can be measured reliably. All other costs are recognised in profit or loss as an expense when incurred.

DepreciationDepreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of plant and equipment. The items of plant and equipment are depreciated over the following periods:

Item Average useful life

Land and buildings Lease PeriodPlant and machinery 5-20 yearsMotor vehicles 6 yearsOther property, plant and equipment 4-20 years

The residual value of each part of property, plant and equipment, if not insignificant, is reassessed annually. The useful lives of these items are reassessed annually.

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Significant Accounting Policies (continued)

for the year ended 31 March 31 2017

1. Presentation of financial statements (continued)

1.2 Property, plant and equipment (continued)

Land is not depreciated.

Gains and losses on disposal of property, plant and equipment items which arise in the normal course of business are determined by comparing proceeds with the carrying amounts and included in profit or loss.

Repairs and maintenenace costs are recognised in profit or loss during the financial period in which these costs are incurred. The cost of a major renovation is included in the carrying amount of the related asset when it is probable that future economic benefits in excess of the most recently assessed standard of performance of the existing asset will flow to the company and the renovation replaces an identifiable part of the asset. Major renovations are depreciated over the remaining useful life of the related asset or until the next major renovations, whichever period is shorter.

1.3 Work in progressCapital work in progress comprises expenses incurred in constructing plant and equipment that are directly attributable to the construction of the asset. Assets remain in capital work in progress until they have been put into use or commissioned, whichever is the earlier date. At that time they are transferred to the appropriate class of property, plant and equipment as additions and depreciated.

1.4 Financial instruments

ClassificationThe company classifies non-derivative financial assets as loans and receivables and non-derivative financial liabilities as other financial liabilities. Financial assets and financial liabilities are recognised in the statement of financial position when the company has become a party to the contractual provision of the instrument.

Non-derivative financial assets and financial liabilities-recognition, measurement and derecognitionLoans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using effective interest method. The company recognises loans and receivables on the date that they are originated. The company dercognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such transferred financial assets that is created or retained by the company is recognised as a separate asset or liability.

The company initially recognises financial liabilities on the trade date, which is the date that the company becomes party to the contractual provisions of the instrument.

The company derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. Non derivative financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognistion, financial liabilities are measured at amortised cost using the effective interest rate method.

For liabilities carried at amortised cost, any gain or loss is recognised in profit or loss when the liability is derecognised or impaired, as well as through the amortisation process.

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1.4 Financial instruments (continued)

Non-derivative financial assets-measurementThe company’s loans and receivables comprise mainly of cash and cash equivalents, trade and other receivables, including amounts due from related parties.

Cash and cash equivalentsCash and cash equivalents are defined as cash on hand, demand deposits and short-term highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

Bank overdarfts, which are payable on demand and form an integral part of the company’s cash management, are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Trade and other receivables including amounts due from related partiesTrade and other receivables, including amounts due from related companies, are amounts due for goods provided in the normal course of business. These amounts are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an impairment accrual. An accrual for impairment is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of these receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that a balance is impaired.

The amount of impairment accrual is the difference between the asset’s carrying amount and the present value of estimated future cash flows; discounted future cash flows are discounted at the effective interest rate. The amount is recognised in profit or loss. Subsequent recoveries of amounts previously written off are recognised in profit or loss.

Investment in sharesInvestment in shares are invested for an indefinite period. These investments are carried at cost less accumulated impairment. Impairment charges are written off to the profit or loss as incurred.

Non-derivative financial liabilitiesFinancial liabilities comprise of interest bearing borrowings and trade and other payables, including amounts due to related companies.

Finance lease obligationsFinance lease obligations are initially recognised at cost, being the fair value of the consideration received and include acquisition charges associated with the borrowing. After initial recognition, borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on settlement. Long term borrowings are classified as financial liabilities at amortised cost.

Trade and other payables, including amounts due to related companiesTrade and other payables, including amounts due to related companies, are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. These amounts are classified as current liabilities if payment is due within twelve months (or in the normal operating cycle of the business, if longer). If not, they are presented as non-current liabilities. Other liabilities comprise of amounts owing to accruals of ongoing costs. The directors consider the carrying amount of other liabilities to approximate their fair values due to the short term nature of these items. Deferred revenues are revenues that have been paid in advance by customers but will receive the services in future. Government Data Networks is recognised as a liability as these amounts were paid in advance for GDN project.

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1.4 Financial instruments (continued)

Gains and losses on subsequent measurementGains and losses arising from a change in the fair value of financial instruments are recognised in profit or loss in the period in which the change arises.

OffsetFinancial assets and financial liabilities are offset and the net amount reported in the statement of financial position when the company has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

1.5 Taxation

Current taxationTaxation comprises of current and deferred taxation. Taxation is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income (OCI) in which case the related taxation is also recognised in the other comprehensive income or equity.

Current taxation comprises the expected taxation payable or refundable on the taxable income or loss for the period and any adjustment to taxation payable or refundable in respect of previous periods. Taxation is measured using rates enacted or substantively enacted at the reporting date.

Current taxation also includes any taxation arising from dividends. Withholding taxation of 7.5% is payable on the gross amounts of dividends declared and paid.

Deferred taxationDeferred taxation is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred taxation assets are recognised for unused taxation losses, unused taxation credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred taxation assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related taxation benefit will be realised.

Deferred taxation is measured at the taxation rates that are expected to apply to temporary differences when they reverse, using taxation rates enacted or substantively enacted at the reporting date.

The measurement of deferred taxation reflects the consequences that would follow from the manner in which the company expects, at the reporting date, to recover or settle the carrying amount its assets or liabilities.

Deferred taxation is not recognised when it arises from:-- temporary differences on the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss.- temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the

company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse of the forseeable future, and

- taxable temporary differences arising from initial recognition of goodwil.

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1.6 Leases

Determining whether an arrangement contains a leaseAt the inception of an arrangement, the company determines whether the arrangement is or contains a lease.

At the inception or reassessment of an arrangement that contains a lease, the company separates payments and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the company concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the company’s incremental borrowing rate.

Lease PaymentsLeases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Payments made or received under operating leases are recognised in profit or loss on a straight line basis over the period of the lease. The operating lease liability resulting from the straight lining is disclosed as deferred income.

Minimum Lease Payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remianing balance of the liability.

1.7 InventoriesInventories are measured at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

The cost of inventories is based on the weighted average cost basis and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

Slow moving, obsolete and redundant inventories are identified on a regular basis and are written down to their estimated net realisable values.

1.8 Impairment

Non-derivative financial assetsA financial asset is considered to be impaired if objective evidence indicates that one or more events had a negative effect on the estimated future cash flows of that asset. Financial assets not measured at fair value through profit or loss, are assessed at each reporting date to determine whether there is any objective evidence of impairment. Objective evidence that financial assets are impaired includes:- default or delinquency by a debtor- restructuring of an amount due to the company on terms that the company would not consider otherwise- indications that a debtor will enter bankruptcy- observable data indicating that there is measureable decrease in expected cash flows from a group of financial assets.

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1.8 Impairment (continued)

Financial assets measured at amortised costThe company considers evidence of impairment for financial assets at both individual asset and a collective level. All individually significant assets are individually assessed for impairment. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics.

In assessing collective impairment, the company uses historical information on the timing of recoveries and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that actual losses are likely to be greater or lesser than suggested by historical trends.

An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Impairment losses are recognised in profit or loss and reflected in an allowance account. When the company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.

Non-financial assetsAt each reporting date, the company reviews the carrying amounts of its non-financial assets other than inventories and deferred tax, to determine whether there is any indication of impairment. If such indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets are regrouped together into the smallest group of assets that generate cash inflows from the continuing use that are largely independent of the cash inflows of other assets or cash generating units (CGU).

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in the prior period are assessed at each reporting date for any indication that these losses have decreased or no longer exist. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1.9 Stated CapitalOrdinary shares are classified as equity. Stated capital is recognised at the fair value of the consideration received. Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from the initial measurement of the equity instrument. Dividend distribution to ordinary shareholders is recognised within equity upon approval by the company’s directors.

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1.10 Employee benefits

Short-term employee benefitsEmployee entitlements to annual leave, bonuses, medical aid, housing benefits and severance benefits are recognised when they accrue to employees and an accrual is recognised for the estimated liability as a result of services rendered by the employee up to the reporting date. These accruals are calculated at the undiscounted amounts based on current wage and salary rates.

Severance benefitsEmployees who are not members of an approved pension scheme or entitled to gratuities per employment contracts, are entitled to severance benefits as regulated by the Botswana Labour Regulations. An accrual is recognised for the estimated liability for services rendered by employees up to the reporting date and are calculated at undiscounted amounts based on current wage and salary rates. Severance benefits are not considered to be a retirement benefit plan as the benefits are payable on completion of a continuous employment period of 5 years or on a pro rata basis on termination of employment.

Pension contributionsA defined contribution retirement plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

Profit sharing and bonus schemesA liability is recognised for the amount expected to be paid under short-term bonus or profit sharing plans if the company has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be estimated reliably.

1.11 Government grants

Government grants are recognised when there is reasonable assurance that:• the company will comply with the conditions attaching to them; and• the grants will be received.Government grants are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs is recognised as income of the period in which it becomes receivable.

Government grants related to assets, including non-monetary grants at fair value, are presented in the statement of financial position by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset.

Grants related to income are presented as a credit in the profit or loss (separately).

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1.11 Government grants (continued)

Repayment of a grant related to income is applied first against any un-amortised deferred credit set up in respect of the grant. To the extent that the repayment exceeds any such deferred credit, or where no deferred credit exists, the repayment is recognised immediately as an expense.

Repayment of a grant related to an asset is recorded by increasing the carrying amount of the asset or reducing the deferred income balance by the amount repayable. The cumulative additional depreciation that would have been recognised to date as an expense in the absence of the grant is recognised immediately as an expense.

1.12 Revenue

Sale of goodsRevenue is recognised when significant risks and rewards of ownership of goods have been passed to the buyer.

Rendering of servicesRevenue is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and exclusive of Value Added Taxation, for service rendered in the normal course of business.

The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement, i.e. on customer acceptance of site specifications

1.13 Sale of goods

The related cost of providing services recognised as revenue in the current period is included in cost of sales.

Contract costs comprise:• costs that relate directly to the specific contract;• costs that are attributable to contract activity in general and can be allocated to the contract; and• such other costs as are specifically chargeable to the customer under the terms of the contract.

1.14 Finance income and expense

Interest income or interest expense is recognised for all interest-bearing financial instruments on an accrual basis, using the effective interest rate method. Interest income or interest expense is recognised in profit or loss except for interest income or interest expense capitalised as part of the construction of a qualifying asset. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.

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1.15 Translation of foreign currencies

Foreign currency transactionsItems included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”).

Transactions conducted in foreign currencies are translated to Pula at the foreign exchange rate ruling at the date of the transaction. Assets and liabilities denominated in foreign currencies at the reporting date are translated to Pula at the foreign exchange rate ruling at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

1.16 New Standards and Interpretations

Standards and interpretations which became effective during the yearThe standards and interpretations which became effective during the year ended 31st March 2018 are summarised as follows:-

Standards/interpretations Impact

Amendments to IAS 7: Disclosure Initiative No impact on the financial statementsAmendments to IAS 12: Recognition of Deferred Tax Assets No impact on the financial statements for Unrealised Losses IAS 12

Standards and interpretations not yet effectiveThe following are new standards, amendments to standards and interpretations which are not yet effective for the year ended 31st March 2018 and have not been applied in preparing these financial statements.

Effective for the financial year commencing 1 April 2018

IFRS 15 Revenue from Contracts with CustomersIFRS 9 Financial InstrumentsClassification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4)Transfers of Investment property (Amendments to IAS 40)IFRIC 22 Foreign Currency Transactions and Advance Considerations


IFRS 16 LeasesIFRIC 23 Uncertainty over Income Tax TreatmentsPrepayment Features with Negative Compensation (Amendments to IFRS 9)Long-term Interests in Associates and Joint Ventures (Amendment to IAS 28)


IFRS 17 Insurance Contracts

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1.16 New Standards and Interpretations (continued)

IFRS 15:- Revenue from Contracts with CustomersThis standard replaced IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18, Transfer of Assets from Customers and SIC-31 Revenue-Barter of Transactions Involving Advertising Services.

The standard will be effective on the 1st April 2018. The standard is not expected to have significant impact except for the indeafesible rights of use (IRU) for WIOCC and BTCL which will be recognised as per IFRS 16, Leases.

The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised.

The standard, which becomes effective for the company’s 2019 financial statements, with early adoption permitted, is currently being evaluated by the company. No impact is expected on the timing of revenue recognition because the current principle practice by BoFiNet on the timing of revenue recognition will satisfy the new requirements.

IFRS 9:- Financial InstrumentsOn 24 July 2014, the IASB issued the final IFRS 9 Financial Instruments standard, which replaces earlier versionsof IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement.

This standard will have an impact on the measurement bases of an entity’s assets to amortised cost, fair value through other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39, the criteria for classification into these categories are significantly different. In addition, the IFRS 9 impairment model has been changed from an “incurred loss” model from IAS 39 to an “expected credit loss” model.

The standard is effective for annual periods beginning on or after 1 January 2018 with retrospective application. Early adoption is permitted. The estimated impact of this standard will be between P 500 000 to P1 500 000 on the financials.

Clarifying share-based payment accounting (Amendments to IFRS 2)Currently, there is ambiguity over how a company should account for certain types of share-based payment arrangements.The IASB has responded by publishing amendments to IFRS 2 Share-based Payments.

The amendments cover three accounting areas:

Measurement of cash-settled share-based payments –The new requirements do not change the cumulative amount of expense that is ultimately recognised, because the total consideration for a cash-settled share-based payment is still equal to the cash paid on settlement.

Classification of share-based payments settled net of tax withholdings –The amendments introduce an exception stating that, for classification purposes, a share-based payment transaction with employees is accounted for as equity-settled if certain criteria are met.

Accounting for a modification of a share-based payment from cash-settled to equity-settled – The amendments clarify the approach that companies are to apply.

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Clarifying share-based payment accounting (Amendments to IFRS 2) (continued)The new requirements could affect the classification and/or measurement of these arrangements and potentially the timing and amount of expense recognised for new and outstanding awards.

The amendments are effective for annual periods commencing on or after 1 January 2018. The standard is not expected to have any impact on the company’s financial statements.

Transfers of Investment property (Amendments to IAS 40)The IASB has amended the requirements in IAS 40 Investment property on when a company should transfer a property asset to, or from, investment property.

The amendments apply for annual periods beginning on or after 1 January 2018. Early adoption is permitted. The standard is not expected to have any impact on the company’s financial statements.

IFRIC 22 Foreign Currency Transactions and Advance ConsiderationsWhen foreign currency consideration is paid or received in advance of the item it relates to – which may be an asset, an expense or income – IAS 21 The Effects of Changes in Foreign Exchange Rates is not clear on how to determine the transaction date for translating the related item.

This has resulted in diversity in practice regarding the exchange rate used to translate the related item. IFRIC 22 clarifies that the transaction date is the date on which the company initially recognises the prepayment or deferred income arising from the advance consideration. For transactions involving multiple payments or receipts, each payment or receipt gives rise to a separate transaction date.

The interpretation applies for annual reporting periods beginning on or after 1 January 2018. The standard is not expected to have any impact on the company’s financial statements.

IFRS 9 Financial instruments with IFRS 4 Insurance contracts (Amendments to IFRS 4)The differing effective dates of IFRS 9 and IFRS 4 could have a significant impact on insurers. In response to concerns regarding temporary accounting mismatches and volatility, and increased costs and complexity, the IASB has issued amendments to IFRS 4 Insurance Contracts. The two optional solutions proposed by the amendments are a temporary exemption from IFRS 9 or an overlay approach.

The amendments are effective for annual periods commencing on or after 1 January 2018.The standard is not expected to have any impact on the company’s financial statements.

IFRS 16:- LeasesIFRS 16 was publised in January 2016. It sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘Lessee’) and the supplier (‘Lessor’). IFRS 16 replaces the previous leases standard, IAS 17 Leases, and related interpretations. IFRS 16 has one model for lessees which will result in almost all leases being included on the Statement of Financial Position. No significant changes have been included for lessors.

The standard is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted only if the entity also adopts IFRS 15.

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IFRS 16:- Leases (continued)

The standard, which becomes effective of the company’s 2019 financial statements, will have an impact on the measurement, presentation and disclosure of operating leases in the company’s financial statements.

IFRIC 23 Uncertainty over Income Tax TreatmentsIFRIC 23 clarifies the accounting for income tax treatments that have yet to be accepted by tax authorities. Specifically, IFRIC 23 provides clarity on how to incorporate this uncertainty into the measurement of tax as reported in the financial statements.

IFRIC 23 does not introduce any new disclosures but reinforces the need to comply with existing disclosure requirements about:- judgments made;- assumptions and other estimates used; and- the potential impact of uncertainties that are not reflected.

The amendments apply for annual periods beginning on or after 1 January 2019 with retrospective application, early adoption is permitted. The standard is not expected to have any impact on the company’s financial statements.

Long-term Interests in Associates and Joint Ventures (Amendment to IAS 28)The amendments clarify that an entity applies IFRS 9 to long-term interests in an associate and joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.

The standard is not expected to have any impact on the company’s financial statements.

The amendments apply for annual periods beginning on or after 1 January 2019. Early adoption is permitted.

IFRS 17 Insurance ContractsIFRS 17 supersedes IFRS 4 Insurance Contracts and aims to increase comparability and transparency about profitability. The new standard introduces a new comprehensive model (“general model”) for the recognition and measurement of liabilities arising from insurance contracts. In addition, it includes a simplified approach and modifications to the general measurement model that can be applied in certain circumstances and to specific contracts, such as:- Reinsurance contracts held;- Direct participating contracts; and- Investment contracts with discretionary participation features.

Under the new standard, investment components are excluded from insurance revenue and service expenses. Entities can also choose to present the effect of changes in discount rates and other financial risks in profit or loss or OCI.

The new standard includes various new disclosures and requires additional granularity in disclosures to assist users to assess the effects of insurance contracts on the entity’s financial statements.

The standard is not expected to have any impact on the company’s financial statements.

The standard is effective for annual periods beginning on or after 1 January 2021. Early adoption is permitted.

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Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)The amendments require the full gain to be recognised when assets transferred between an investor and its associate or joint venture meet the definition of a ‘business’ under IFRS 3 Business Combinations. Where the assets transferred do not meet the definition of a business, a partial gain to the extent of unrelated investors’ interests in the associate or joint venture is recognised. The definition of a business is key to determining the extent of the gain to be recognised.

The IASB has decided to defer the effective date for these amendments indefinitely. Adoption is still permitted.

Prepayment Features with Negative Compensation (Amendments to IFRS 9)The amendments clarify that financial assets containing prepayment features with negative compensation can now be measured at amortised cost or at fair value through other comprehensive income (FVOCI) if they meet the other relevant requirements of IFRS 9.

The standard will not have an impact on the financial statements.

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Notes to the Financial Statementsfor the year ended 31 March 31 2017

2. Property, plant and equipment

2018 2017

Cost / Accumulated Carrying Cost / Accumulated Carrying Valuation depreciation value Valuation depreciation value

Land 6,910,400 — 6,910,400 — — — Buildings 114,629,219 (23,200,435 ) 91,428,784 114,456,598 (16,994,193 ) 97,462,405Plant and machinery 1,489,079,252 (286,769,028 ) 1,202,310,224 1,363,061,478 (200,112,966 ) 1,162,948,512Motor vehicles 15,090,309 (5,702,571 ) 9,387,738 12,492,642 (3,581,575 ) 8,911,067Other Plant and Equipment 81,904,687 (36,938,265 ) 44,966,422 66,721,890 (23,106,671 ) 43,615,219Capital Work in Progress 146,673,174 — 146,673,174 114,611,249 — 114,611,249Total 1,854,287,041 (352,610,299 ) 1,501,676,742 1,671,343,857 (243,795,405 ) 1,427,548,452

Reconciliation of property, plant and equipment - 2018

opening balance Additions Transfers Depreciation Total Land — 6,910,400 — — 6,910,400Buildings 97,462,405 172,621 — (6,206,242 ) 91,428,784Plant and machinery 1,162,948,512 25,440,939 100,576,835 (86,656,062 ) 1,202,310,224Motor vehicles 8,911,067 2,597,667 — (2,120,996 ) 9,387,738Other Plant and Equipment 43,615,219 15,182,797 — (13,831,594 ) 44,966,422Capital Work in Progress 114,611,249 132,638,760 (100,576,835 ) — 146,673,174 1,427,548,452 182,943,184 — (108,814,894 ) 1,501,676,742

Reconciliation of property, plant and equipment - 2017 other opening changes, balance Additions Transfers movements Depreciation Total

Buildings 99,458,395 4,313,577 — — (6,309,567 ) 97,462,405Plant and machinery 1,056,493,690 8,288,623 174,609,700 — (76,443,501 ) 1,162,948,512Motor vehicles 9,417,085 2,747,789 — (1,329,063 ) (1,924,744 ) 8,911,067Other Plant and Equipment 35,714,207 8,373,069 11,484,120 — (11,956,177 ) 43,615,219Capital Work in Progress 59,894,358 240,810,711 (186,093,820 ) — — 114,611,249 1,260,977,735 264,533,769 — (1,329,063 ) (96,633,989 ) 1,427,548,452

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3. Deferred tax

The deferred tax assets and the deferred tax liability relate to income tax in the same jurisdiction, and the law allows net settlement. Therefore, they have been offset in the statement of financial position as follows:

2018 2017 P P

Deferred tax (liability) (69,434,259 ) (32,764,505 )

Reconciliation of deferred tax (liability) / asset

At beginning of year (32,764,505 ) 6,845,878Current year movement in deferred tax (36,669,754 ) (39,610,383 ) (69,434,259 ) (32,764,505 )

Analysis of deferred taxationAccelerated capital allowances on property, plant and equipment (97,974,669 ) (49,945,262 )Finance lease (18,218,775 ) (18,737,842 )Unrealised foreign exchange gains 198,026 (668,479 )Prepayments (1,225,460 ) (1,386,548 )Deferred Income 47,786,619 37,973,626 (69,434,259 ) (32,764,505 )

4. Investment in shares

Investments in shares represents shareholding in WIOCC (West Indian Ocean Cabling Company). The company holds 550 ordinary shares valued at 1000 US Dollars each in WIOCC. The cost of the investment in shares is P5,882,353. (2017: P5,882,353)

The investments in WIOCC are measured and disclosed at cost less impairment.

2018 2017 P P

5. Inventories

Raw materials, components 16,872,435 17,060,648

Notes to the Financial Statements (continued)


82





2018 2017 P P

6. Trade and other receivables

Trade receivables 70,273,600 88,291,852 Impairment accrual (2,758,769 ) (707,777 ) GDN Receivable — 10,830,725 Other receivables 31,560,828 24,874,161 99,075,659 123,288,961

Other receivables compriseSundry customers 24,998,696 3,355,269Government Subvention receivable — 10,645,839Prepayments and deposits 5,570,272 6,540,973Other Advances — 3,731,376Imprest Control 92,620 181,831Other receivables 899,240 418,873 31,560,828 24,874,161

7. Cash and cash equivalents

Cash and cash equivalents consist of:Cash in hand 5,348 9,937Call Accounts - BWP 157,315,657 96,258,451Short-term deposits 40,000,000 —Current Account - USD 1,554,830 8,752,812 198,875,835 105,021,200

Cash and Cash equivalents comprise of:-Cash in hand 5,348 9,937Bank balances 162,326,134 106,792,156Short-term deposit 40,000,000 —Bank Overdraft (3,455,647 ) (1,780,893 ) 198,875,835 105,021,200

Short term deposit represent the short term fixed deposit with Banc ABC. It carries an interest rate of 4.35% and matures on 31st July 2018.

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2018 2017 P P

8. Stated capital

Issued1,000,000 ordinary shares at P746.24 747,244,423 747,244,423

The holders of the ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company. All shares rank equally with regard to the company’s residual assets.

9. Funding Reserve

Botswana Fibre Networks was set up as part of the asset separation exercise in the privatisation of a local company. The funding received relates to equity in respect of assets taken over and cash received from the Government of Botswana for setup and initial operating activities. These amounts are interest free and are not expected to be repaid.

2018 2017 P P

Opening Balance 732,111,696 677,455,569Cash funding 126,886,812 82,726,875Amortisation of Government Grants (32,768,671 ) (28,070,748 ) 826,229,837 732,111,696

10. Other financial liabilities

Held at amortised costUASF Funding 4,653,888 5,235,624

The Universal Access Services Fund (UASF) Grant relates to the capital subsidy provided by the Fund for the implementation of WIFI Hotspots in key strategic public areas including cities, towns and major tourist destinations. BoFiNet rolled out the project in partnership with the Fund.

Non-current liabilitiesAt amortised cost 4,072,152 4,653,888

Current liabilitiesAt amortised cost 581,736 581,736 4,653,888 5,235,624

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2018 2017 P P

11. Finance lease obligation

Minimum lease payments due- within one year — 213,464 — 213,464less: future finance charges — (2,857 )Present value of minimum lease payments — 210,607

12. Deferred revenue

Non-current liabilities 180,116,417 136,907,391Current liabilities 37,095,487 35,700,000 217,211,904 172,607,391

The deferred revenue comprises of lease agreement in respect of indefeasible rights of use of assets with Botswana Telecommunications Corporation and WIOCC.

The future lease payments receivable are detailed as follows:-

Deferred RevenueBalance as at 01 April 2017 172,607,391 112,027,931BTC IRU invoiced during the year 81,700,000 97,700,000Recognised revenue for BTC IRU (35,700,000 ) (35,700,000 )Recognised revenue for WIOCC IRU (1,395,487 ) (1,420,540 ) 217,211,904 172,607,391

The future lease payments receivable are detailed as follows- receivable within one year — 81,700,000

13. Government Data Network Liability

The Government Data Network (GDN) liability relates to funds received from the Government of Botswana for the GDN project, which BoFiNet is managing on behalf of Government.

Opening balance (10,830,725 ) 158,682,479Amount received during the year 85,000,000 —Less:- Expenses for the year (67,893,470 ) (169,513,204 ) 6,275,805 (10,830,725 )

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2018 2017 P P

14. Trade and other payablesTrade payables 37,529,207 57,262,810Other payables 33,559,975 22,873,378 71,089,182 80,136,188

Other payables comprise:-Payroll related accruals 19,792,669 16,481,551Sundry payables 13,767,306 6,391,827 33,559,975 22,873,378

15. RevenueSale of goods and rendering of services 254,059,707 215,581,800Government subvention 34,700,000 64,266,179Amortisation of Government Grant 32,768,671 28,070,747 321,528,378 307,918,726

16. Cost of sales

Sale of goodsCost of goods sold 80,914,516 80,932,840Depreciation 93,008,177 81,451,750 173,922,693 162,384,590

17. Other incomeRebate received 4,570,825 3,444,936Tender Fees and Sundry Income 2,552,372 1,852,847Dividend Received 2,847,862 8,778,663Amortisation of UASF 581,736 581,736UASF Subsidy 3,492,305 3,492,305Cost of works revenue 4,883,868 — 18,928,968 18,150,487

18. Finance income

Interest revenueBank 2,522,716 1,374,477

19. Finance costsFinance Lease Obligations 477,960 1,574,375

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2018 2017 P P

20. Taxation

Major components of the tax expense

DeferredDeferred tax movement 36,669,754 39,610,383

No provision for normal company taxation was made as the company has a calculated accumulated tax loss of P155,437,412 (2017: P308,030,358) to be offset against future taxable income. Tax losses fall away after five years if not utilised.

No deferred taxation asset was recognised in respect of the calculated losses as it was not considered probable that these losses will be utilised within the five year mandatory period. Deferred taxation at 22% of the calculated tax loss would result in a deferred taxation asset of P34,196,231 (2017: P67,766,679).

2018 2017 P P

21. Auditors’ remunerationFees 497,490 386,250

22. Operating Profit

Operating profit is stated after the followingDepreciation on property, plant and equipment 15,806,717 15,182,239Unrealised exchange gains 900,117 (4,207,730 )Consultancy fees 4,089,551 8,339,087Employee costs 71,063,012 70,476,997 91,859,397 89,790,593

23. Cash generated from operations

Profit before taxation 8,425,157 18,344,327Adjustments for:Depreciation and amortisation 15,806,717 15,182,240Interest received (2,522,716 ) (1,374,477 )Finance costs 477,960 1,574,375Depreciation (included in cost of sales) 93,008,177 81,451,749Loss on write-off of assets — 1,329,063Amortisation of Government Fund (32,768,671 ) (28,070,748 )Changes in working capital:Inventories 188,213 (5,643,268 )Trade and other receivables 24,213,302 (45,887,246 )Trade and other payables (9,047,006 ) (37,797,611 )Deferred revenue 44,604,513 60,579,460 142,385,646 59,687,864

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2018 2017 P P

24. Government Funding

Government Funding (Note 9) 126,886,812 82,726,875

25. Related parties

RelationshipsBotswana Telecommunications Corporation Limited (BTCL) Common shareholderGovernment of Botswana Principal shareholder

The related party balances are interest free and unsecured.The transactions were conducted on mutually agreed terms and conditions.

Related party balances

Loan accounts - Owing (to) by related partiesAmounts due from related party - Botswana Telecommunications Corporation Limited 20,099,299 29,304,041Amount (due to) / due from Government of Botswana for Government Data Network (6,275,805 ) 10,830,724

Related party transactions

Government of BotswanaFunding 126,886,812 82,726,875Government subvention 34,700,000 64,266,179

BTCLIRU invoiced during the year 81,700,000 97,700,000Recognised revenue from BTCL IRU (35,700,000 ) (35,700,000 )Invoicing for services outside IRU 80,227,039 71,950,477

BTCLSale of goods and provision of services 816,418 —

Key personnel remunerationShort term employee benefits (salaries and allowances) 3,564,208 4,197,700Directors’ fees 624,686 304,901 4,188,894 4,502,601

26. Capital Commitments

Authorised commitments 28,467,349 83,094,730

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27. Risk management

OverviewThe company has exposure to interest rate, liquidity, foreign currency and credit risk which arises in the normal course of the company’s business. This note presents information about the company’s exposure to each of the above risks, the company’s objectives, policies and processes for measuring and managing these risks, and the company’s management of capital. Further quantitative disclosures are included. The Board of Directors has overall responsibility for the establishment and oversight of the company’s risk management framework.

The company’s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls, and to monitor risks and adherance to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the company’s activities.

The Board of Directors oversees how management monitors compliance with the company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the company. The following analysis indicates the carrying and fair values of financial instruments in the settlement of financial position:

2018 2017 P P

Financial assetsTrade and other receivables 93,505,387 116,747,988Investment in shares 5,882,353 5,882,353Cash and Cash Equivalents 198,870,487 105,021,200 298,258,227 227,651,541

Financial liabilitiesTrade and other payables 51,296,512 80,136,188Finance lease obligation — 213,464 51,296,512 80,349,652

Liquidity riskThe company is exposed to daily operational payments, payments of trade payable balances, payment of amounts due to related companies and payment of interest-bearing borrowings. Liquidity risk is the risk that cash may not be available to pay obligations when due at a reasonable cost. The company sets limits on the minimum proportions of maturing funds available to meet such calls and unexpected levels of demand.

Contractual cashflows due Carrying in less than 2018 amount 6 months

Trade payables 37,529,206 37,529,206Other payables 13,767,306 13,767,306 51,296,512 51,296,512

89





27. Risk management (continued)

Contractual Contractual cashflows due cashflows due Carrying in less than in more than 2017 amount 6 months 6 months

Trade payables 57,262,810 49,297,720 7,965,090Other payables 6,391,827 6,391,827 —Finance lease obligation 210,607 213,464 — 63,865,244 55,903,011 7,965,090

Interest rate riskFinancial instruments that are sensitive to interest rate are cash and cash equivalents and interest bearing-borrowings. Interest rates applicable to financial instruments fluctuate with movements in the Botswana prime interest rate and are comparable with rates that are currently available in the market.

An increase of 50 basis points in interest rates during the period would not have had a significant impact on the results of the company. Financial instruments subject to interest rate risk are summarised as follows:

Interest rate Interest rate Balance at Balance at per annum per annum period end period end 2018 2017 2018 2017

Call Accounts 1.25% 0.50% 157,315,657 91,396,569

Credit riskThe company has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due.Key areas where the company is exposed to credit risk are:- amounts due from trade and other receivables,- amount due from related party, and- investments in cash and cash equivalents.

The company limits the levels of credit risk that it accepts by placing limits on its exposure to a single counterparty or group of counterparties.

Exposure to third parties is monitored as part of the credit control process. The maximum exposure to credit risk is presented by the carrying amount of each financial asset in the statement of financial position.

Reputable financial institutions are used for investing and cash handling purposes. All money market instruments and cash equivalents are placed with financial institutions registered in Botswana. Banks in Botswana are not rated but the banks concerned are regulated by Bank of Botswana.

The company establishes an allowance for impairment which represents its estimate of incurred losses in respect of trade receivables. This allowance is estimated through a detailed specific balance analysis of the trade receivable balances and includes trade receivables handed over to lawyers, known slow payers and disputed amounts.

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Credit risk (continued)

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposue to credit risk at the reporting date is analysed as follows:-

Financial instrument 2018 2017

Trade receivables 67,514,831 88,291,852Other receivables 26,990,556 34,997,109Cash and Cash equivalents 198,870,487 105,021,200

The ageing of trade receivables at the reporting date is analysed as follows:-

Ageing 2018 Impairment 2017 Impairment

Not past due (0-30 days) 26,476,883 — 18,434,720 —30-60 days 18,035,019 — 22,573,271 —60-120 days 18,489,237 — 18,567,143 —Over 120 days 4,513,692 — 28,716,718 —Subtotal 67,514,831 — 88,291,852 — 67,514,831 — 88,291,852 —

Foreign currency riskThe company is exposed to foreign currency risk for transactions which are denominated in a currency other than Pula. The company does not take cover on foreign currency as it regards the Pula as a stable currency.The company’s exposure to foreign exchange risk, based on notional amounts, is anlaysed as follows:- Foreign Pula Foreign Pula Foreign Currency equivalent Currency equivalentDescription Currency amount 2018 2018 amount 2017 2017

Trade receivables USD 1,053,166 10,335,291 1,342,014 14,508,263Trade payables USD (2,064,839 ) (20,263,386 ) (2,622,646 ) (28,352,932 )Trade payables GBP (22,998 ) (314,185 ) (17,040 ) (227,176 )Trade payables EURO (1 ) (12 ) (1 ) (12 )Trade payables ZAR (11,163,765 ) (9,460,818 ) (1,423,851 ) (1,162,327 )Subtotal (12,198,437 ) (19,703,110 ) (2,721,524 ) (15,234,184 ) (12,198,437 ) (19,703,110 ) (2,721,524 ) (15,234,184 )

The following exchange rates were used at reporting date:-

US Dollar - 0.1019/BWP (2017: 0.0925/BWP)GB Pound - 0.0732/BWP (2017: 0.0750/BWP)ZA Rand - 1.18/BWP (2017: 1.22/BWP)Euro - 0.0835/BWP (2017: 0.0871/BWP)

91






Foreign currency risk (continued)

Sensitivity analysisA 10 percent strengthening of the Botswana Pula against the above currencies at the reporting date would have increased the company’s profit before taxation by the amounts shown below. This analysis assumes that all the other variables, in particular interest rates, remain constant.

2018 Effect on profit

USD 1,309,749GBP 28,567EURO —ZAR 1,142,066

2017 Effect on profit

USD 1,396,926GBP 22,716EUR —ZAR 105,666

A 10 percent weakening of the Botswana Pula against the above currencies at reporting date would have had an equal but opposite effect on the company’s loss before taxation to the amounts shown above, on the basis that all the other variables remain constant.

28. Fair value information

Fair value hierarchyFinancial instruments carried at fair value are categorised in three levels by valuation method. The different levels have been defined as follows:-- Level 1: Quoted market price in an active market for an identical instrument.- Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for identical instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data;

- Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The company’s financial insruments carried at fair value are categorised as level 3.

92






The company’s assets and liabilities are categorised as follows:-

Financial Financial other non- assets liabilities at financial Carrying designated Loans and amortised assets andAssets 2018 values at fair value receivables cost liabilities

Investments in shares 5,882,353 5,882,353 — — —Property, plant and equipment 1,501,676,742 — — — 1,501,676,742Trade and other receivables 99,075,659 — 93,505,447 — 5,570,212Cash and cash equivalents 198,875,835 — 198,870,487 — 5,348Inventory 16,872,435 — — — 16,872,435 1,822,383,024 5,882,353 292,375,934 — 1,524,124,737

Financial Financial other non- assets liabilities at financial Carrying designated Loans and amortised assets andLiabilities 2018 values at fair value receivables cost liabilities

Trade and other payables 71,089,182 — — 51,296,512 19,792,670Deferred Tax 69,434,259 — — — 69,434,259Deferred revenue 217,211,904 — — — 217,211,904Other financial liabilities 4,653,888 — — 4,653,888 —Government Data Network Liability 6,275,805 — — — 6,275,805 368,665,038 — — 55,950,400 312,714,638

Financial Financial other non- assets liabilities at financial Carrying designated Loans and amortised assets andAssets 2017 values at fair value receivables cost liabilities

Investments in shares 5,882,353 5,882,353 — — —Property, plant and equipment 1,427,548,452 — — — 1,427,548,452Trade and other receivables 123,288,961 — 112,415,908 — 10,873,053Cash and cash equivalents 105,021,200 — 105,011,263 — 9,937Inventory 17,060,648 — — — 17,060,648 1,678,801,614 5,882,353 217,427,171 — 1,455,492,090

Financial Financial other non- assets liabilities at financial Carrying designated Loans and amortised assets andLiabilities - 2017 values at fair value receivables cost liabilities

Trade and other payables 80,136,188 — — 80,136,188 —Deferred revenue 172,607,391 — — — 172,607,391Deferred Tax 32,764,505 — — — 32,764,505Finance Lease Obligation 213,464 — — 213,464 — 285,721,548 — — 80,349,652 205,371,896

93



Detailed Income Statementfor the year ended 31 March 31 2017

2018 2017 note(s) P P

RevenueSale of goods and rendering of services 254,059,707 215,581,800Government subvention 34,700,000 64,266,179Amortisation of Government Grant 32,768,671 28,070,747 15 321,528,378 307,918,726

Cost of salesCost of Sales (173,922,693 ) (162,384,590 )Gross profit 147,605,685 145,534,136

Other incomeRebate received 4,570,825 3,444,936Tender Fees and Sundry Income 2,552,372 1,852,847Dividend Received 2,847,862 8,778,663Amortisation of UASF 581,736 581,736UASF Subsidy 3,492,305 3,492,305Cost of works revenue 4,883,868 —Interest received 18 2,522,716 1,374,477 21,451,684 19,524,964

Expenses (Refer to page 93) (160,154,252 ) (145,140,398 )Operating profit 8,903,117 19,918,702Finance costs 19 (477,960 ) (1,574,375 )Profit before taxation 8,425,157 18,344,327Taxation 20 36,669,754 39,610,383(Loss) profit for the year (28,244,597 ) (21,266,056 )

The supplementary information presented does not form part of the financial statements and is unaudited

94



Detailed Income Statement (continued)


2018 2017 note(s) P P

Operating expensesAdvertising (8,909,392 ) (7,742,241 )Levies (576,842 ) (502,161 )Auditors remuneration 21 (497,490 ) (386,250 )Bank charges (2,276,217 ) (413,241 )Cleaning (490,792 ) (391,468 )Consulting Fees (4,089,551 ) (8,339,087 )Consumables (86,834 ) (232,269 )Depreciation and amortisation (15,806,717 ) (15,182,240 )Salaries and Wages (69,091,038 ) (67,938,515 )Entertainment (66,347 ) (6,353 )Seminars and Events (1,274,416 ) (1,896,518 )Foreign Exchange Gians and Losses (900,117 ) 6,615,941Tender Costs (254,778 ) (487,825 )Other Expenses (298,049 ) (192,681 )Recruitment Costs (335,059 ) (30,269 )Sponsorships (Social Responsibilty) (3,223,571 ) (2,552,207 )Directors’ Fees (624,686 ) (304,901 )Loss on disposal of asset — (1,329,072 )Car rentals (568,212 ) (2,317,757 )Insurance (2,108,179 ) (1,880,642 )Lease rentals (1,580,343 ) (2,939,723 )Legal expenses (187,400 ) (477,880 )Medical expenses (1,971,975 ) (2,539,322 )Motor vehicle expenses (697,602 ) (283,650 )Fuel (1,951,419 ) (1,900,063 )Printing and stationery (1,124,729 ) (1,329,334 )Uniform and Clothing (137,998 ) —Repairs and maintenance (889,145 ) (1,590,135 )Security (8,098,708 ) (5,556,494 )Staff welfare (2,559,362 ) (1,715,551 )Subscriptions (7,791,910 ) (3,308,918 )Telephone and fax (2,750,783 ) (2,772,960 )Training (2,010,836 ) (1,971,143 )Transport and freight (480,532 ) (959,926 )Travel (4,193,003 ) (6,503,421 )Utilities (12,250,220 ) (5,782,122 ) (160,154,252 ) (145,140,398 )

The accounting policies on pages 68 to 80 and the notes on pages 81 to 93 form an integral part of the financial statements.

95



Notes

96



BOTSWANA FIBRE NETWORKZambeziTowers,Floor2,3&4,

Plot54352WestAvenue,NewCBD,Gaborone,BotswanaTel:+2673995500,Fax:+2673903414

Email:[email protected]

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epow

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