HARARE, June (The Source) – Finance Minister Patrick Chinamasa has told TelOne management to diversify the state owned fixed network operator’s product offerings after it announced a dropped in revenue to $49,4 million for the first half of 2016, sliding from $60 million last year.
TelOne managing director, Chipo Mtasa, told the company’s second annual general meeting on Friday that the dip in revenue was primarily due to a 20 percent slide in voice service earnings, hit by a rise in use of over the top services (OTTs).
“We recorded a 10 percent increase in broadband revenue but this has not matched the 18 to 19 percent drop decline in voice revenues,” she said, adding OTTs were driving the demand for broadband services.
In the six months, TelOne’s broadband subscriber base jumped by over 25 percent to 76,303.
Operating costs eased to $48 million from $58 million in the comparable period last year but earnings before interest and depreciation remained flat at $1,3 million.
The telco spent $2,7 million in capital expenditure, down from $6,5 million last year, as it sought to contain costs.
Mutasa said the firm cut salaries by 15 percent across the board and froze bonuses in August last year to cut costs, saying these would only be re-instated “if the business responds.”
Mutasa told the meeting, which Chinamasa attended representing government as the shareholder, that the telco was struggling, but making efforts to recover $264 million owed to it by players in the economy.
Corporates and small to medium enterprises owe TelOne $92,2 million, households $82, million, government $41,1 million, parastatals $36,9 million and local authorities $10,6 million.
On the other hand, the firm’s creditors stood at $129 million with the top two, the Postal and Telecommunication Regulatory Authority of Zimbabwe and Econet, owed a combined $54,4 million.
Mutasa appealed for the reinstatement of a debt “offset arrangement” between parastatals which would help cancel out debts among state owned enterprises.
“(Tax agent) Zimra garnished our accounts and collected $6,7 million and we now owe them about $2,6 million, but the money they took was meant to service other creditors,” Mutasa said.
She bemoaned legacy debts amounting to $348 million as at the end of last year, which she said continued to impact negatively on the business.
The telco has in the last few years emerged as one of the most profitable parastatals, not relying on government bailouts.
TelOne recorded a net profit of $12,8 million for the full year ended December 2014, which however slumped to $5,8 million last year.
In response, Chinamasa said TelOne must widen its revenue streams to boost income.
“My interest in state enterprises in the telecommunications business is that they should be cash cows and should contribute significantly to government revenue,” he said.
“Your business is too heavily dependent on voice and you should make significant progress into the internet business.”
“Cutting salaries by 15 percent needs to be emulated not only in the private sector but in government. It was a very courageous and brave decision to align employment costs to the operating environment.”
He said government was still looking at ways to address legacy debts, a problem that most parastatals were battling.