TelOne clings to 300 000 subscribers

TELONE, the country’s sole fixed telephone operator, is currently clinging on to 300 000 subscribers as it smarts from the legacy effects of a phenomenal growth in mobile telephony.
However, the parastatal remains confident that it is capable of remaining viable and growing its business by exploiting several niches that currently exist in the market.

The “mobile miracle” in Zimbabwe, a phenomenon attendant to the popularity of the cellular phone, has been accompanied by unprecedented growth in mobile subscriptions especially in the past six years.

Statistics from regulator the Postal Telecommunications Regulatory Authority of Zimbabwe (Potraz) indicate that by the end of last year the mobile penetration rate, which measures mobile cellular subscriptions, had climbed to 103,5 percent.

Experts say there were more active mobile subscriptions compared to the current total population of 13,1 million.

The country’s three mobile operators — Econet Wireless Zimbabwe (EWZ), Telecel and NetOne — have also been growing.

By December last year EWZ’s subscribers had spiked to 8,5 million, while increases to 2,54 million and 2,45 million were recorded for Telecel and NetOne respectively.

Conversely, the conditions are markedly different for the fixed telephone as the penetration rate in the sector has since dropped to 2,4 percent.

Though Government intended to establish a duopoly for the fixed telephone network with parastatal TelOne competing with a private operator, the public entity has virtually enjoyed a monopoly to date as TeleAccess — the company that had been duly licensed to roll out its service in the sector — failed to take off within the stipulated period of time.

The licence was subsequently cancelled in 2005.

There are now real fears that the floundering local fixed telephone business might ultimately collapse.

TelOne managing director Mrs Chipo Mtasa told The Sunday Mail Business last week that TelOne has “more than enough capacity to add more subscribers all over Zimbabwe”.

“TelOne has more than enough capacity to add more subscribers all over Zimbabwe. TelOne has over 300 000 operational landlines and our capacity is just below 500 000.

“TelOne actually owns and operates a factory located within the Msasa Industrial Park in Harare. The core business of this factory is the fabrication of various types of hardware and infrastructure equipment which supports telecommunications, for example, microwave towers as well as the repair of telecommunication equipment such as handsets and power supplies.

“We therefore have adequate resources to repair phones and maintain our infrastructure.

“Admittedly, mobile telephony has grown significantly in Zimbabwe and the world over, but the landline continues to be relevant in the market. For TelOne, voice service is one of our major revenue streams,”said Mrs Mtasa.

It is also believed that corporate clients are a cornerstone of the fixed telephone business as they mainly rely on the service for “proper identification”.

Market watchers also contend that the fixed line is critical for business (access networks) and for national and metro networks, but future growth is forecast to be limited.

It is often suggested that there is likely to be more fibre deployment in the fixed-line network.

Added Mrs Mutasa: “The fixed phone of today (also) comes with many useful value-added services to make user experience pleasurable. For example, TelOne’s ADSL Broadband is also delivered through existing copper networks at superfast speeds; so we are confident that the landline will indeed be around for a long time to serve the needs of Government, corporates and individuals.”

In recent years the parastatal has been broadening its portfolio in order to exploit opportunities that present themselves in several market niches, especially in the Internet business.

The operator claims that there has been a significant uptake of its ADSL broadband product particularly by small to medium enterprises.

Also in areas that are not covered by fibre or copper infrastructure its VSAT service (Ka Band) is used to connect subscribers to the World Wide Web .

About 100 units have been installed so far since the launch of the business in April this year.

But TelOne, like most local businesses, has been hamstrung by defaulting customers.

Currently, the business is owed more than US$150 million and is currently negotiating with debtors on repayment plans, including engaging the services of debt collectors.

However, in October last year the business offered a bill debt relief worth US$80 million through crediting US$257 to each residential account, a move that was interpreted by the market as a deliberate attempt to lure back customers.

In 2009 there was enduring market rumour that Telkom, the South African fixed line operator, was willing to take up a 60 percent take in the local business.

The deal did not materialise.

TelOne was born out of the unbundling of the Posts and Telecommunications Corporation (PTC) in 2000, which also saw the formation of Zimpost and POSB.

The company’s history dates back to 1890 when it was formed by Cecil John Rhodes’ BSAC to enhance communication between the then new colony and Britain, the colonial master.

Challenges afflicting the fixed line business are not peculiar to Zimbabwe alone as similar challenges have been reported in other regional jurisdictions as well.

Zambia’s Zamtel is grappling to fend off competition from mobile operators, while Nitel in Nigeria is now considered as moribund as it is not delivering any retail services.

South Africa’s Telkom has, however, been able to hold its own despite also experiencing difficulties in the market. By March 31 2014, Telkom’s telephone access lines had dropped to 3,6 million from 3,8 million.

Potraz acting director-general Mr Alfred Marisa says the fixed telephone network has literally been rendered redundant by the mobile phone business.

“Talking about the fixed phone business, I think, might not be relevant because of convergence. The fixed phones have been rendered redundant by mobile phones. At the moment, there is stagnation in that line of business, or it could be migration of subscribers from fixed phone to mobile.

“I don’t know of anyone who might want to come here and start the landline services,” said Mr Marisa, adding that no investor has approached Potraz seeking a fixed phone operating licence since the cancellation of that of TeleAccess.