HomeBusinessTelOne blames $25 million loss on legacy debt

TelOne blames $25 million loss on legacy debt

HARARE — Fixed telecoms operator, TelOne made a loss of $24,9 million in 2016 due to a decline in voice revenue and the high cost of servicing legacy loans.

The Source

TelOne managing director Chipo Mutasa
TelOne managing director Chipo Mutasa

The company inherited legacy loans from the Post and Telecommunications Corporation (PTC) amounting to $364 million and the cost of servicing them was draining its resources.

“Legacy loans inherited from the PTC, amounting to $364 million, continue to weigh down TelOne’s financial performance. Interest charges arising from this legacy debt were $18 million in the period under review. The company incurred a further $1,4 million exchange loss on the legacy loans,” said the company.

Revenue for the full year fell 17% to $114 million due to the high use of Over The Top Services in preference to traditional voice services. Voice revenue dropped by a third to $97 million from $73 million in the previous year.

Earnings before interest, tax, depreciation and amortisation slumped 26% to $13,9 million.

Operating costs came in 17% lower on the back of cost containment measures.

However, revenue for the first five months to May marginally increased to $50 million, pushed by growth in broadband income.

The state-owned company, which has plans to develop into a converged telecoms network offering enhanced data services above its traditional voice service, said broadband contributed 32% of total revenue from 23% in the prior year after it invested heavily into overlay services.

Managing director Chipo Mutasa told journalists on Friday after the company’s annual general meeting that inconsistent debt payments are negatively affecting revenue inflows.

“We are being affected by people generally not paying their bills on time. We have a huge debtors book, right now government (ministries) debtors were at $59 million as at the end of May,” said Mutasa.

Parastatal and state owned enterprises owe the company $39 million, households $20 million, corporates $22 million, local authorities $4 million and others, $4 million.

Total assets stood at $489 million from $478 million in 2015 with a net liability of $111 million.

Going forward, the TelOne expects its National Broadband Project (NBB) to drive profitability in 2018.

Under the project, the parastatal has completed Harare and Mutare Metro network expansion, Bulawayo-Victoria Falls microwave link upgrade, Mutare-Harare-Bulawayo-Plumtree backbone fibre upgrade, Harare Main Data Centre Facility and core network upgrade at Harare Main Exchange.

Recent Posts

Stories you will enjoy

Recommended reading