Converged Telecommunications Operator, TelOne recorded a $25 million loss for the year ending December 31, 2016, against a $5 million profit they had registered in the previous year.
The loss is attributed to tough economic environment coupled with depressed financial activity, increased depreciation and mounting legacy debts that have been stalking the company since the PTC era. TelOne Managing Director, Chipo Mtasa bemoaned voice reduction and the legacy debt as the major albatross to the company’s profitability.
The company’s loss position narrows from $24.9 million to $5.7 million without the impact of legacy loans.
“This shows the extent of the impact of the legacy loans on the company’s ability to perform. Furthermore, the company’s loss position was exacerbated by an increased depreciation charge of $25.5 million in 2016 compared to $10.6 million in 2015. The depreciation charge increased by 142% following an asset revaluation exercise carried out during the year,” said TelOne Managing Director Chipo Mtasa.
In the period under consideration, revenues in the Telecoms industry declined by 21% from $1.4 billion in 2015 to $1.1 billion in 2016. The decline in revenues was attributed to the increased usage of Over The Top Services (OTTS) at the expense of traditional services such as voice. The industry has seen 1 195 growth in broadband revenues which increased from $800 million in 2015 to $950 million in 2016.
During the period under review, the company’s financial performance was weighed down by a high depreciation charge that was not matched by growth in revenue along with the high legacy loan finance charges of $18 million.
Meanwhile, the TelOne managing director remained upbeat that the company was on the correct path and will soon turn the corner.
“We are not disturbed by the loss since we know that our data infrastructure that we are currently laying out will soon mature and recover the revenues to compensate on the voice call decline gap,” she said.
Telone’s turnaround strategy is anchored on a $98m loan from the China Exim Bank the entity received under the Zim-China mega deals.
Mtasa said the signing of the $98 million Preferential Buyers Credit facility between the government of Zimbabwe and China Exim Bank in December 2015 gave traction to the business model as funds became available for much-needed modernization program and expansion of the fibre network.
“In a bid to curb continued decline in voice revenues which dropped by 25% over the past year, the company spent $25 million in capital projects with $8 million being own funding.
“The expansion of the broadband network is in view of the opportunities in growing broadband revenue. This resulted in additional 15,580 houses passed with FTTH, 31,000 ADSL lines, 133 hotspots and IP core upgrade among other projects,” said Mtasa.