INFORMATION Communication Technology, Postal and Courier Services minister Jenfan Muswere says state-run telecommunications firm, TelOne, must recover the ZW$720 million (US$8,42 million) owed by customers as of December 2020.
TelOne is owed more than ZW$1,4 billion (US$16,38 million), including a ZW$575 million (US$7,03 million) government debt.
The total money owed is down from ZW$1,7 billion (US$20,78 million) in 2019.
These arrears are constraining the company’s cash flows and liquidity position as the company slowly returns to profitability after posting a 147% increase in revenue, in inflation adjusted terms, to ZW$4,7 billion (US$57,47 million). This was from a 2019 comparative of ZW$1,9 billion (US$113,29 million).
The improvement was due to a 14% increase in broad-band subscribers, coupled with a 22% increase in usage. The rise in revenue led to a 2% increase in earnings before interest depreciation and tax to ZW$671 million (US$8,2 million) in 2020 from a 2019 comparative of ZW$658 million (US$39,23 million).
“On debtors, TelOne should ensure it recovers the debtor’s book of ZW$1,4 billion to avoid loss in value of the amount owed due to inflation,” Muswere said.
“While government is a significant debtor, TelOne also needs to ensure recovery of ZW$720 million debt owed by other customers. The introduction of prepaid services for these debtors is encouraged. TelOne also needs to ensure that 25% of the National telecoms revenue share is achieved by 2021.”
According to TelOne, the government owed ZW$575 million (US$7,03 million), while parastatals and state-owned enterprises accounted for ZW$105 million (US$1,28 million) as at the end of last year.
Failure to improve its cash flow and liquidity may constrain the future adaptation to technological changes through launching new innovative products.
“The government has 22% (ZW$119 million: US$1,39 million) of its debt outstanding for more than six months, thereby constraining the company’s cash flows and liquidity position,” TelOne board chair Douglas Zimbango said.
“As a means to mitigate the problem, the company has made an appeal to the Ministry of Information Communication Technology, Postal and Courier Services and Ministry of Finance and Economic Development to facilitate the company’s initiatives to ease the debt. A number of government ministries have now been migrated to prepaid services.”
The debt owed to TelOne comes as the firm shrunk its debt in trade payables to ZW$2,3 billion (US$28,12 million) in 2020 from ZW$2,7 billion (US$161 million) in 2019 owing to the revenue increase.
“The bulk of these creditors are foreign creditors whose balances are affected by exchange rate fluctuations on translation. In an effort to maintain a good relationship with creditors, the company continuously engages suppliers for flexible payment plans,” Muswere said.
“Also, the company continued navigating new strategies to improve revenue generation and cash collections on outstanding receivables to accelerate creditor’s payment plans.”
Apart from revenue growth, last year’s performance was also driven by cost containment initiatives.
However, operating expenses increased by 220% to ZW$3,2 billion (US$39,12 million) in 2020, from ZW$1 billion (US$59,63 million) in 2019, which was mainly attributable to a depreciation in exchange rate.
Zimbango said the business remained focused on providing unparalleled customer experience in an evolutionary way, whilst pursuing their vision of “digitally enabled society by 2025”.