TelOne narrows losses to $7m

INTEGRATED telecommunications firm, TelOne, continues to show signs of recovery after narrowing its operating losses by 42 percent to US$7 million, while revenues also rose by 3 percent last year driven by a strong performance in broadband services.

Operating losses (earnings before interest and tax) were pegged at US$12 million in 2016.

This emerged during the company’s annual general meeting held in Harare last Friday.

TelOne’s revenue for the year to December last year was US$117 million from US$114 million in the prior, representing a 3 percent jump, owing to an upsurge in broadband revenues.

The performance is considered significant given that voice revenue declined by 6 percent, in tandem with worldwide trends.

Broadband revenue grew by 36 percent and generated US$45 million last year, compared to US$33 million the previous year.

The company’s subscriber base grew by 8,8 percent to 87 851 subscribers last year.

TelOne’s profitability at earnings before interest, taxes, depreciation and amortisation (EBITDA) level improved by 47 percent to US$20 million from US$14 million.

The improved performance was achieved through cost containment and broadband growth.

It is now expected that TelOne will enjoy more profits going forward, driven by the US$98 million National Broadband Project (NBB), which is now 98 percent complete.

Last year, TelOne channelled most of its energies on expanding broadband which largely focused on increasing the core network capacity as well as fortifying the network, which was mainly legacy.

Further, TelOne realised a significant uplift in assets to US$548 million by end of last year, from US$490 million in 2016, due to network investments made under the NBB project.

TelOne board chairperson, Mrs Juliet Machoba, last week told the AGM that the company expects broadband revenue contribution to continue rising and potentially reach 50 percent by next year.

“In line with worldwide trends, voice traffic is expected to continue in a downward trend as clients continue to opt for broadband internet and Over The Top Services (OTTS).

“Voice revenue in TelOne is expected to reduce to less than 40 percent in 2019 while broadband contribution to revenue is expected to reach up to 50 percent in the same period,” said Mrs Machoba.

The company has already started a drive towards enhancing its value added service offering as a way of harnessing potential revenues brought about by increased broadband capacity and subscribers.

However, TelOne’s balance sheet continues to be weighed down by legacy loans of up to US$364 million inherited from the unbundling of the former Posts and Telecommunication Corporation (PTC) in 2000.

A conclusion of the debt restructuring exercise is expected to ease the company’s profit and loss position.

Equally, foreign currency challenges remain a major hindrance to TelOne’s operations amid indications that foreign obligations are rising to unsustainable levels.

TelOne operations, including bandwidth importation, are dependent on foreign partners.

The company is calling for the prioritisation of foreign currency allocations to settle obligations so as to avoid service disruption.

Government’s recent announcement on the privatisation of TelOne is expected to bring in new opportunities for growth and partnerships.

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