Subscribers desert Telecel

Telecel board chairperson James Makamba

ZIMBABWE’S third largest mobile telecoms operator lost 22 032 active subscribers during the 2023 final quarter, bringing to limelight damaging consequences of uncertainties provoked by corporate rescue reports.

Telecel Zimbabwe, which operates in a market dominated by telecoms billionaire Strive Masiyiwa’s Econet, along with state-run NetOne, slipped into turmoil in May, as a trade union pushed for it to be placed under administration.

Ramifications of the turbulences were telling in the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) 2023 fourth quarter data, which showed Telecel surrendering 7,3% of its active subscribers to close at 281 332 from 303 364 during the third quarter.

The data showed Telecel was the only loser, after the Zimbabwe Stock Exchange-listed Econet added 1,2% subscribers during the period to maintain its market dominance with 70% of the 14,9 million subscriber sector.

“Telecel’s active subscriber base continued on a downward trend as evidenced by a 7,3% decline in active subscribers,” Potraz said in its 22-page report.

“Conversely, NetOne and Econet grew in subscribers by 1,9% and 1,2%, respectively in the quarter under review. The sector recorded 14 973 816 active mobile subscriptions in the fourth quarter of 2023.

“This translates to a 1,2% increase from 14 794 579 recorded in the third quarter.

“As a result, the mobile penetration rate grew by 0,2% to record 97,7% from 97,5% recorded in the previous quarter. NetOne gained subscriber market share by 0,2% in the fourth quarter of 2023, whilst Econet and Telecel lost theirs by 0,1% each.

“However, Econet continued to dominate the market in terms of subscribers with close to 70% share of the total subscribers,” it noted.

The report said combined mobile telecoms sector revenues hit ZW$1,1 trillion during the review period, rising 35% from ZW$851 billion during the third quarter.

Capital expenditure grew 245,6% to ZW$117,1 billion during the review period, compared to the previous quarter.

“Total operating costs grew by 62,3%, a margin that surpasses revenue growth by 27,8%,” Potraz said.

“This shows a decline in revenue-to-cost ratios (RCRs), which indicates that operating costs are closing in on revenue, which can pose operational challenges.

“Nominally capital expenditure grew by 245,6% in the quarter under review. However, in real terms this may not reflect significant growth in mobile operator investment due to hyperinflation,” it added.

Potraz said total mobile traffic, which is measured in minutes, fell by 7,6% during the review period.

The report did not give reasons for the slide.

But the domestic mobile telecoms market has been rattled by relentless troubles in the past year.

In the end, subscribers grappled with serious network gridlocks across platforms, with voice calls taking several times to connect.

Efficiencies in data transmission were also affected.

Operators say they have been affected by foreign currency problems to import capital equipment.

But in the past few months, tariffs have generally swung towards United States dollars in line with trends taking place across markets.

Consumers hope with dollarisation taking root, service will improve.

But it is not clear if Telecel will have the muscle required to pull  back its deserting customers, having gone through phases of damaging bad publicity in the past few years.

Chairperson, James Makamba sprang to the network’s defence in May, dismissing, reports that the operator had been placed under “corporate rescue proceedings”, following an announcement in the Government Gazette dated May 12, 2023.

This was after the Communication and Allied Service Workers Union of Zimbabwe approached the High court seeking an order to begin corporate rescue proceedings.

Makamba dismissed the notice as nothing, but a legal nullity.

“It is noted by the board with extreme concern that a gazetted notice was published on Friday May 12, 2023 to the effect that corporate rescue proceedings had validly commenced,” he said.

“This is not accurate or true. Telecel Zimbabwe (Pvt) Ltd wishes to assure the public, stakeholders, creditors and all interested Telecel persons that it continues to provide its services as normal.

“An invalid legal process by the Communication and Allied Workers Union of Zimbabwe was lodged in the High Court of Zimbabwe under HC 306/22 in October 2022 through Gumbo & Associates.

“That application was opposed. The outcome of those proceedings awaits a set down date to determine the validity and the merits.The notice as published in the Gazette is considered a legal nullity.

“All interested stakeholders, including the public, our customers and creditors, are assured that there is no valid basis to assert that Telecel is unable to discharge payments of any valid debt or is incapable of discharging its service provisions to the public, beyond the normal constraints exerted by the current tough operating environment,”  Makamba said.

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