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Minister Mandiwanzira

Business Reporter
TELONE plans to grow revenue from broadband after its top line plunged 17 percent to $114 million last year, while remaining nearly flat in the first five months of 2017, weighed down by a difficult economic environment.

TelOne said broadband contributed about a third of revenue last year at $33 million while it projected a $17 million profit in 2018 driven increased contribution from broadband.

The company is implementing a broadband project being financed under a $98 million loan facility secured from China Eximbank. TelOne suffered reported a $24,9 million loss last year compared to a US$5,8 million profit in 2015 dragged by a sharp decline in revenue from voice calls.

It has since managed to arrest the haemorrhage, but is unsure about the sustainability of the situation after adopting prepayment measures for its services.

Revenue from broadband accounted for 32 percent of the top line in the period January to May 2017 from 23 percent in 2016. There was a sharp decline in voice revenue in 2016, as was the case with the entire telecoms industry, which registered a 21 percent fall in revenue to $1,1 billion.

Efforts are being made to increase revenues from the company’s fledgling broadband business.

Managing director Mrs Chipo Mutasa said revenue grew marginally in the first five months of this year, registering a 1 percent surge to about $50 million, compared to the same period in 2015.

Speaking after the company’s annual general meeting in Harare on Friday, Mrs Mutasa said voice revenue had been hit by increased usage of over-the-top (OTT) services.

“Our revenue was flat, just a slight increase in the first five months compared to last year, but what has happened is that, at least, the revenue decline has been arrested. However, we cannot say for how long because, as we introduce the prepaid platform, it might result in another decline in revenue,” she said.

“So we are in the process of remodelling the TelOne business. The remodelling of the business does not happen overnight, it is not a short term thing, but a medium to long term thing.”

She noted that company is determined to revamp its business.

“We think that as we reposition ourselves to provide broader broadband services, our broadband revenue will go up. However, the voice revenue, which we were dependent on so much, will continue to go down,” Mrs Mutasa said.

TelOne has also been weighed down by debts amounting to $150 million, including ones contracted by Government ministries, institutions and quasi-Government entities, which owe the State telecommunications operator the largest chunk, as well as debts from private companies and households.

As at May 31, 2017 Mrs Mutasa said Government owed $59 million, households $20 million, corporates $22 million, parastatals and state enterprises $39 million, local authorities $4 million while for call interconnections and wholesale partners the company was owed about $4 million.

The company was also being bogged down by $364 million legacy debts inherited from the Postal and Telecommunications Corporation era.

Interest payment on the debt stood at $18 million last year. Information Communication Technology, Postal and Courier Services Minister Supa Mandiwanzira said though he was disappointed by the company’s financial performance, he was happy with measures being taken to rehabilitate the State enterprise.

“What we are very excited about is that we can see the progression in the business. We can see that there is a plan to deal with some of the issues that have resulted in losses that they are making and we acknowledge that the business environment is very difficult at this particular moment.

“But we also have to realise that there are many other opportunities that are emerging from the services that could be delivered as a result of the infrastructure that TelOne has or is investing in,” he said.

Minister Mandiwanzira also said Government, management and the board of TelOne had a role to play in its turnaround, including settlement of debts owed by various arms of the State to all its telecommunication companies and resolving legacy issues.