HomePoliticsTel*One in debt crisis

Tel*One in debt crisis

Dumisani Muleya

THE state-owned fixed telephony network company, Tel*One (Pvt) Ltd, owes foreign creditors US$350 million, rendering it technically insolvent.

ial, Helvetica, sans-serif”>Government sources said Tel*One was heavily indebted to British Telecom, South Africa’s Telkom, the African Development Bank, Netherlands’s ING-Bank, France’s Banque Nationale de Paris, Kredittanstalt fur Wiederaufbau of Germany, Norway’s Eksportfinans, Overseas Economic Cooperation, Itochu-D and Eximbank of Japan, the Bank of China and the African Banking Corporation.

Sources said the debts amount to US$350 million, about $8,4 trillion at the official exchange rate or $15,8 trillion on the parallel market. This makes Tel*One all but bankrupt, just like other public enterprises, despite the fact that it makes up to $60 billion a month.

However, Tel*One public relations manager Phil Chingwaru said the company’s debt was only US$100 million.

“Tel*One’s current foreign debt arrears stand at US$100 million, which is $3,8 trillion while its estimated asset base value stands at $4,5 trillion,” he said.

“The company has entered a partnership with a local cotton merchant, Graffax, and the partnership is yielding results as inflows from cotton exports are helping in reducing the foreign debt.”

However, sources said Tel*One was saddled with debts which technically make it insolvent.

“The company owes foreign creditors at least US$350 million and if you consider its balance sheet, its assets and liabilities, it is bankrupt,” a source said.

“Its valuation at the moment is nowhere near its liabilities. The good thing though is that some of its debts are long-term. Redemption dates for loans go as far as 2033 in some cases but as we speak it is bust.”

But Chingwaru maintained Tel*one was solvent because “our problem is not having Zim dollars but foreign currency”.

Sources said Tel*One’s debt to foreign banks and companies, as well as shortages of foreign currency to replace obsolete analogue equipment, were causing network problems.

Problems of telephone networks – both fixed and cellular phone – are wreaking havoc in the economy as they make it every difficult to conduct business.

The Confederation of Zimbabwe Industries in May raised the issue of telephone networks with government, which controls Tel*One and one of the three cellu-lar telephony companies, Net*One.

“The telephone and cellphone networks are giving increasing problems,” the CZI said in a paper to the Minister of Industry and International Trade, Obert Mpofu. So far nothing has been done.

The system’s technical hitches have become a nightmare for companies and individuals who want efficient and reliable networks. Making calls in Zimbabwe has become a test of endurance as one has to dial persistently to get through. During peak hours it is almost impossible to phone.

Sources said Zimbabwe had been disconnected by South Africa’s Telkom for failing to repay US$7 million. Tel*One owes Telkom US$18 million in total for the fixed network upgrades between Musina, South Africa’s border town with Zimbabwe, and Harare. Chingwaru confirmed this, saying “efforts are being made to honour the debt”.

South Africa provided Zimbabwe with the latest terrestrial technology – synchronous digital hierarchy (SDH) – which use microwave to upgrade the Harare-Musina route. But Zimbabweans now phone South Africa through Tele-Globe in Canada after disconnection of the direct link.

This explains the current poor quality of calls to South Africa. Rerouting of calls through Canada affects quality because it lengthens the distance of satellite feeds and sometimes goes through Voice Over Internet Protocol.

Internet routers have many hitches – latency and jitter – and this affects the quality of calls.

Zimbabwe is also restricted by the United Kingdom because Tel*One owes British Telecom US$14 million. The amount could be up to US$28 million if the administrative charges are taken into account. The UK now allows a limited number of calls to avoid Tel*One debt accumulation.

“We have got serious telephone problems. Tel*One is restricted by some of its key partners such as South Africa’s Telkom and British Telecom due to non-payment. We were even once restricted by Kenya,” a source said.

“The amounts due are inter-administrative settlements between Tel*One and international operators which accumulate due to the provision of the service of terminating (connecting to the end user) each other’s calls.”

As Zimbabwe’s largest trading partner, South Africa, provides the biggest volumes of telephone traffic. Tel*One expected to make a lot of revenue out of this and then repay the Telkom debt.

However, lately there has been a significant reduction of traffic volumes from South Africa to Zimbabwe, affecting Tel*One’s termination revenues.

Termination is the service provided by one network to another on the basis of an agreed payment formula for delivering calls to end-users. The network that sends more calls to the other pays more.

Recent Posts

Stories you will enjoy

Recommended reading