STATE-OWNED telecommunications giant, NetOne last year registered a marginal revenue growth of 1% in 2016, earning $115 million compared to $114 million the previous year.
The mobile operator was the only one to record a growth as its two other competitors, Econet and Telecel, registered revenue decline of varying magnitude according to the Postal and Telecommunications Regulatory Authority report of 2016.
According to NetOne’s 2016 financial results released on Friday at the company’s annual general meeting (AGM), Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) grew to $41,6 million in 2016 compared to $24,6 million in 2015, indicative of the business potential.
The company, however, registered a loss of $2,7 million compared to $2,6 million recorded the previous year.
NetOne said revenue performance was a direct result of a number of initiatives put in place by management to drive business growth, mainly the offering of customer-centric products, broadening the product and service offering and the realising of existing products, while driving subscriber acquisition.
“One such initiative was the introduction of OneFusion in May 2016, whose uptake has been on the upward trend since launch. The business will continue to introduce disruptive customer-centric products in order to drive revenue growth and subscriber acquisition and retention,” the company said.
In a statement accompanying the company’s results, acting chairperson, Peter Chingoka said the marginal revenue growth was due to depressed demand experienced during the year due to liquidity challenges experienced countrywide.
“Overheads for the period remained high due to network expansion projects which resulted in more network overhead than planned. Structurally, cost rationalisation remains a focus area for the board and management in order to manage energy costs, security costs, site rental costs, transmission rental, various licensing costs as well as staff costs,” Chingoka said.
NetOne acting chief executive officer, Brian Mutandiro said the concessional $218 million China Exim Bank facility provided the much needed debt capital to expand the network.
Mutandiro said, while management remained resilient and focussed on driving the performance of the business, legacy-related issues continued to slow progress in key areas.
“The year under review saw the forensic audit which took close to five months to conclude and the attendant publicity on the business that went with it,” he said.
“Despite this, concerted efforts to improve the company’s debt profile were made, with various suppliers re-opening credit facilities to the business, others being engaged on payment plans as well clearance of legacy tax obligations of just over $7 million, as management remained focussed on moving the business forward.”
Meanwhile, Telone’s revenues for the first five months of the year remained stagnated at $50 million, a meagre 1% improvement compared to the 2016’s comparative period on the back of unpaid debt owed to them and legacy loans.
In TelOne’s results for the financial year ending December 31, 2016, the operator made a loss of $24,92 million from the previous year’s profit after tax of $5,81 million with legacy loans factoring in.
TelOne managing director, Chipo Mutasa told journalists on the sidelines of TelOne’s AGM of their financial results for the year-ended December 2016 on Friday, that both their debtors and legacy loans were hampering them from turning a profit.
“We have a huge debtors’ book. Right now, I would say that government debtors were at $59 million at the end of May, the lack of consistent payments is really affecting us. For households, it was about $20 million, corporates at $22 million, parastatals and State-owned enterprises at $39 million, the smaller ones (local authorities) $4 million and there is what we call interconnection and other wholesale partners at $4 million,” she said.
“We also need our legacy loans to be dealt with conclusively, but we definitely have a plan that our loss position has to be narrower. We think that we will not be able to get out of all the losses this year, but going into 2018, by mid-2018, we should be coming back.”
TelOne was owed $150 million at the end of the five months and while legacy loans totalled $364 million at the end of 2016.
Driving the stagnated revenues in the first five months of the year was a decline in voice revenues which is on course to close 2017 below the 66% contribution recorded from this segment in 2016.
However, TelOne recorded an increase of revenue generated from their broadband business to 32% in the first five months from 2016’s comparative period of 23% which is on course to close higher by the end of the year.
As such, Mutasa said $14 million from a $98 million China-Exim bank facility would be spent on upgrading its broadband this year.
Information and Communication Technology minister Supa Mandiwanzira said the government directly and indirectly through parastatals owed nearly $100 million to TelOne.
“We have already been engaging with the minister of Finance, Patrick Chinamasa, to see if we can put a structure in place to see if government could honour its obligations, telecommunication obligations to TelOne, NetOne and Telecel through a structure that then allows these operations to be sustainable,” he said.