STATE-OWNED telecommunications company TelOne’s $345 million legacy debt inherited during the then Postal and Telecommunications Corporation (PTC) era is weighing down on its operations, a company official has said.
TelOne managing director Chipo Mtasa told the Parliamentary Committee on Information Communication Technology, Postal and Courier Services on Monday that the debt was making it difficult for the company to access lines of credit resulting in various threats of litigation.
“The biggest challenge is the legacy debt of $345 million we inherited from the PTC era. We think we do have the basis to grow profitable, as currently our operating profit before the interest charges is $12 million,” Mtasa said.
“We have made presentations to our parent ministry about the $345 million legacy debt and we are hoping for a long-term restructuring plan to address the issue of the legacy debt.”
In 2000, PTC was unbundled to form three companies—TelOne, Net One and Zimpost.
Mtasa said the company was currently working on a business strategy to turn around its fortunes to a profitable entity from a loss-making situation.
The TelOne boss said the company had been constrained to pay its own creditors because it was owed over $200 million by government, parastatals and quasi-government entities.
“We are owed over $200 million by a number of institutions, parastatals, government and companies, but we think this figure really has to go down,” Mtasa said.
She said last year the company managed to collect $90 million from debtors and had issued offset arrangement of about $70 million.
Tel One, Mtasa said, was encouraging payment arrangements from debtors rather than asking for cash upfront due to liquidity challenges in the market.
She added that there was need for government to intervene on the issue of duplication of infrastructure in the telecommunication sector as currently government was not getting the necessarily returns on investment.
“The company’s invested infrastructure has been rendered redundant as each operator prefers to invest in their own gateway,” she said.