STATE-OWNED telecoms company TelOne says it is struggling with loans inherited from its predecessor the Post and Telecommunications Corporation (PTC) amounting to US$399 million by 2023 year-end, a development that has hamstrung its expansion plans.
BERNARD MPOFU
In 1987, a new law which ushered the unbundling of PTC into three commercial entities was promulgated but the commercialisation took place in 2000, with the breaking up of the telco into TelOne — a fixed telecommunications provider, Net*One— a mobile network providing a cellular network and ZimPost — a postal services company.
All these entities were regulated by the Postal and Telecommunications Regulatory Authority of Zimbabwe. Just recently, the Finance ministry through the Munhumutapa Investment Fund took full control of TelOne from the ICT ministry in a move that raised eyebrows among critics.
Lawrence Nkala, the recently appointed CE of the entity, recently told journalists that the legacy debt, limited access to capital to retool the business, uneconomic tariff, government debtors, theft and vandalism are chocking the business.
“Due to technological obsolesce of the network, inherited and foreign currency shortages, the company has not been able to repay these loans,” Nkala told journalists during a media tour of TelOne’s operations.
“Government of Zimbabwe resolved to take over these in 2019 which has not yet materialised, resulting in the company operating in a net liability position.
“The business requires about US$250 million for infrastructure, technology mordenisation and capacity upgrades. Funds are specifically targeted to deploy fibre and wireless access solutions which will enhance the country’s connectivity and bridge the digital divide.”
Delays in reviewing tariffs, Nkala added, continued to affect the profitability of the business.
“Government debt continues to escalate despite high-level engagements with defaulting ministries and government. Government owed TelOne ZW$184 billion as at 31 January 2023 and the outstanding amounts are taking longer to be paid resulting in value erosion due to inflation and exchange rates movements.”
Zimbabwe is battling rising inflation and a weakening domestic currency.
Official statistics show that more than 80% of transactions are now being carried out in hard currency as most retailers and service providers frown at the domestic currency.
