THE state-owned fixed telephony network company, Tel*One (Pvt) Ltd’s huge debt profile poses a serious threat to its central role in the telecommunication system, sources have said.
Information obtained this week showed Tel*One’s debt situation in May amounted to $1,3 trillion. In foreign currency, the principal debt was about US$216 million. However, when interest and inter-administrative charges were added it rose to almost US$350 million.
A confidential financial report dated May 31 showed that Tel*One was heavily indebted to British Telecom (US$14 million), South Africa’s Telkom (US$18,9 million), Belgium’s ING-Bank (euro 10 million), France’s Banque Nationale de Paris (euro 5,9 million, Kredittanstalt fur Wiederaufbau of Germany (e26 million), Norway’s Eksportfinans (k14,4 million), Overseas Economic Cooperation, Itochu-D and Eximbank of Japan (Yen 11 billion), the Bank of China (US$2,7 million), African Development Bank (US$32,9 million) and the African Banking Corporation (US$2,6 million).
Sources said the debt profile made Tel*One technically insolvent, but the company denied this. It said its debt was US$100 million, while its asset base was $4,5 trillion, meaning the debt was equal to its assets.
But a US$350 million debt amounts to about $8,4 trillion at the official exchange rate and $15,8 trillion on the parallel market.
The debt and foreign currency situation have largely paralysed Tel*One, causing chaos in the telephone system. The cutting of direct links with South Africa over a US$7 million debt and restrictions by the United Kingdom have worsened the situation.
Sources said Tel*One had been struggling to boost revenue collection by coming up with new debt management measures. The firm banks 80% of collected telephone revenue on the same day. This ensures it reaps all possible interest from the banked money. It now bills all new customers within a month following connection.
The company has committed itself to produce and send telephone bills within seven days of the end of the month. It has also said it will ensure the bills contain the latest meter readings.
“Collection of 80% of new debt within a month,” a Tel*One financial document says. “This reduces business dependence on borrowing.
Customer service managers shall operate a target focused debt collection strategy. Performance shall be reviewed against set targets for commercially billed and bulk billed customers.
“If revenue leakages are plugged, it reduces incidences of customers contesting bills and instigates early cash inflows to the business.”