TelOne engages Govt on debt takeover

teloneBusiness Reporter
GOVERNMENT may soon assume State owned fixed telecoms operator, TelOne’s legacy debts amounting to $360 million with Cabinet set to deliberate on the possibility of warehousing the liabilities.

The debts were inherited after the unbundling of the then Postal and Telecommunications Corporation. PTC was unbundled into commercial entities; TelOne, NetOne and Zimpost in 2000.

TelOne chairman Mr Charles Shamu told journalists after the company’s annual general meeting yesterday that deliberations over the debts will be taken to Cabinet, with a positive outcome expected.

“The shareholder (Government) realises the weight that the debt has on the operating company, but obviously the shareholder on his own has to take the decision on what we have discussed in our AGM to Cabinet, and Cabinet could be sympathetic to our requests. Commitment by Government in this regard is expected to change the prospects of the company once effected,” said Mr Shamu.

The removal of the debt from the balance sheet will allow the telecommunications company access to loans at reasonable interest rates. Mr Shamu said the board and management made representations to the Government over the debt takeover during the inaugural annual general meeting.

“Obviously, if the company starts operating without the debt the company will be able to operate more freely and also be able to declare dividends . . . which dividends are currently going to service the loans.”

TelOne’s 2014 financial report shows that its balance sheet has a net liability of $163 million resulting from the $360 million legacy loans.

Speaking at the company’s AGM Information Communication and Technology, Postal and Courier Services Minister Supa Mandiwanzira said Government was satisfied with TelOne’s performance.

“We are working with management and the board of TelOne to ensure that they give that satisfaction to all stakeholders. So far, with the performance that has been presented at this AGM we are satisfied and confident we will not go back to treasury again for debt takeover of a similar nature,” said Minister Mandiwanzira.

In 2014, TelOne recorded a profit before tax of $17,7 million, which was a 187,1 percent increase from the previous year’s profit of $6,2 million. Revenue for the period increased by 7 percent to $162 million from $152 million.

Finance and Economic Development Minister Patrick Chinamasa to the same general meeting said Cabinet would consider the sustainability of the company’s profitability prior to debt takeover.

“We need to be satisfied that management is sound and that it (the debt accrual) will not be repeated. It should not be like a cycle that even if we take over (the debt) now, after a few years they will be asking us to take over another one and so on. So that is that matter that we are going to discuss,” said Minister Chinamasa.

The new corporate image and focus on customer service excellence coupled with new broadband services being rolled out are expected to be key pillars for growth of the company in next year.

TelOne said cost containment and operating efficiency remain a major point of focus as the company moves to productivity linked operating model.

You Might Also Like

Comments

Take our Survey

We value your opinion! Take a moment to complete our survey