US$318m debt cripples TelOne

Source: US$318m debt cripples TelOne – The Zimbabwe Independent November 16, 2018

Telecoms sector has not been spared the effects of diminishing consumer spending power in the economy

FIXED telecommunications network operator TelOne’s US$318 million debt book is hampering the company’s ability to operate effectively, prompting the parastatal to explore ways of recovering the money.

By Kudzai Kuwaza

In an interview this week, TelOne managing director Chipo Mtasa pointed out that the state-owned enterprise has implemented various debt collection strategies. “The company is saddled with a high-trade debtors’ book, which is currently $318 million. This has resulted in a debt trap, whereby we are also not able to service local obligations properly. These obligations include interconnection services, licence and spectrum fees and so forth,” Mtasa said. “We have put in place different strategies on debt collection. We have made sure we have adequate teams for collection. We also have a billing and receivables manager responsible for the whole debtors’ book to ensure follow-ups and all communication.”

TelOne has not been spared by the acute shortage of foreign currency hampering the viability of companies. “Availability of foreign currency has remained a major constraint to the business, with foreign obligations rising to unsustainable levels,” Mtasa said.

She said the company’s market share has increased, largely driven by data. “Indeed, our total revenue increased by 20,1% to record US$34,4 million in the second quarter from US$28,2 recorded in the first quarter of 2018. This is largely because our market share is growing and this is mainly in data,” Mtasa said. The TelOne boss added that in the second quarter of 2018, the contribution of data to total revenues increased by 1,8%, whereas the contribution of voice declined by 2,2%. Mtasa said TelOne’s recently launched on-demand news and entertainment streaming service, Digital Entertainment On Demand (DEOD), will boost TelOne revenues significantly, especially since broadband revenues have already been on the rise.

“At this year’s Annual General Meeting we announced that our broadband revenues grew by 36% from US$33 million in 2016 to $45 million in 2017,” Mtasa said. “We are positive that our Value-Added Services, which include DEOD, will further increase our revenue market share.”