Limited funding chokes Telecel Zimbabwe

BY MTHANDAZO NYONI

TELECEL Zimbabwe says its operations have been affected mainly by limited funding for a long period of time, in the face of challenging economic conditions in the country.
In a statement, Telecel said though it faced some challenges, it was not on the brink of collapse and continues to offer quality service to its customers.

“Like all other local organisations, Telecel Zimbabwe’s operations have been affected by a host of factors, both macro and micro economic, but attributed mainly to limited funding for the company over a long period of time, in the face of challenging economic conditions in Zimbabwe.

“Specifically, rapid depreciation of the local currency and the levels of tariffs increases approved, which continue to lag behind inflation, have affected the ability to meet the foreign currency-denominated obligations, especially spares for equipment and service level agreements and support,” the company said.

Government is the major shareholder after acquiring from Amsterdam-based VimpelCom (now Veon) 60% shareholding in the third largest telecom company and is in the process of buying the remaining 40%.

The remaining shareholding is controlled by James Makamba through Kestrel Corporation, the Indigenous Business Women Organisation through Jane Mutasa’s Selporn Investments, Zimbabwe Miners’ Federation, Affirmative Action Group, War Veterans’ Association and Zimbabwe Farmers’ Union
The mobile operator has, however, been the subject of a share ownership battle over the years. In October last year, the High Court ruled in favour of once-exiled Makamba in a long drawn-out Telecel Zimbabwe (Pvt) Ltd share ownership battle with a war veterans’ organisation, Magamba eChimurenga Housing Trust.

Workers at the mobile network operator last wee raised a red flag over the state of affairs at the company, saying it faces imminent collapse unless government urgently intervenes to rescue the entity.

In order to mitigate these challenges, Telecel said it had been on a very aggressive import substitution and local skills transfer drive.

It also decried power outages which have resulted in the company’s operating costs ballooning due to the use of alternative power, particularly diesel, and has in turn affected base station availability in many parts of the country.

The company is, however, in advanced discussions with the power authorities and officials in the Ministry of Energy to ensure a dedicated power line to its switching centres.

In addition, the company is investing in alternative power solutions such as Tesla solar batteries for its base stations.

Telecel said it continues to engage all the relevant authorities to ensure that the tariffs are adjusted in line with the cost movement of other basic operational costs.

“The Telecel board and shareholders are aware of the ongoing challenges. Plans are underway to address the issue of recapitalisation and in this regard, a five-year strategic plan has already been formulated and adopted,” the statement reads.

“The finalisation of all outstanding financial statements is on course and this will open avenues for new funding from financial institutions.”

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