TelOne owed US$264 million by corporate, individuals
STATE-OWNED fixed line phone operator, TelOne says it is struggling to recover US$264 million owed to it by corporates and individuals.
“Corporates and small to medium enterprises owe TelOne US$92,2 million, households US$82, million, government US$41,1 million, parastatals US$36,9 million and local authorities US$10,6 million,” said TelOne’s managing director, Chipo Mtasa, at the company’s annual general meeting (AGM) last Friday.
The firm currently owes creditors US$129 million, with the top two, the Postal and Telecommunication Regulatory Authority of Zimbabwe and Econet, being owed a combined US$54,4 million.
Mtasa said TelOne’s revenue dropped to US$49,4 million for the first half of 2016, from US$60 million achieved during the same period last year.
“The dip in revenue was primarily due to a 20 percent slide in voice service earnings, hit by a rise in the use of over the top services (OTTs),” she said.
OTT is a conceptual term that describes a scenario in which a service provider delivers one or more of its services across all internet protocol networks, predominantly the public internet.
OTTs are currently driving the demand for broadband services.
TelOne’s broadband subscriber base jumped by over 25 percent to 76 303 between January and June 23.
“We recorded a 10 percent increase in broadband revenue, but this has not matched the 18 to 19 percent decline in voice revenues,” Mtasa said.
Operating costs eased to US$48 million from US$58 million in the comparable period last year, but earnings before interest and depreciation remained flat at US$1,3 million.
The fixed line phone operator spent US$2,7 million in capital expenditure, down from US$6,5 million last year, as it sought to contain costs.
As part of containing costs, Mtasa said TelOne cut salaries by 15 percent across the board and froze bonuses in August last year, saying these would only be re-instated “if the business responds positively.”
Finance Minister Patrick Chinamasa, who represented TelOne’s shareholder at the AGM, said government and other private sector companies should take a cue from the state-owned firm.
“Cutting salaries by 15 percent needs to be emulated not only in the private sector, but in government. It was a very courageous and brave decision to align employment costs to the operating environment,” he said.
As technological convergence redefines business models across nearly every industry, mobile and fixed telecommunications companies have shown a growing appetite for innovation in order to survive and thrive in a fast-paced and unpredictable environment.
The parastatal has sought to diversify its revenue streams to compensate for falling income from voice by investing heavily in data services.
Chinamasa said TelOne should diversify its product offerings to increase revenue.
“My interest in State enterprises in the telecommunications business is that they should be cash cows and should contribute significantly to government revenue…Your business is too heavily dependent on voice and you should make significant progress into the internet business,” Chinamasa said.
Mtasa appealed for the reinstatement of a debt “offset arrangement” between parastatals which would help cancel out debts among State-owned enterprises.
“(Tax agent) Zimra garnished our accounts and collected US$6,7 million and we now owe them about US$2,6 million, but the money they took was meant to service other creditors,” Mtasa said.
Last year, TelOne said it was targeting to increase annual revenue by 140 percent to US$381 million, driven by growth in data income.
It hopes to grow its voice market share by 21 percent by 2018.
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