The Sunday Mail
Africa Moyo
TELONE reported a US$25 million loss for the year ended December 31, 2016 from a profit of US$5,8 million a year earlier as voice revenue tanked and interest rates on legacy debts rose.
The country’s fixed phone operator inherited a US$364 million debt from the unbundling of the former Posts and Telecommunication Corporation (PTC) in 2000.
Last year, TelOne made interest payments of US$18 million on the debt.
The company’s balance sheet is presently in a net liability position of US$111 million.
Board chairperson Engineer Charles Shamu indicated in the company’s 2016 annual report that legacy debts remain an “albatross to the company’s finances”.
“While the high depreciation charge is a temporary situation as data revenues are expected to grow due to uptake in broadband services, the legacy loans remain an albatross to the company’s finances,” he said.
For fiscal 2016, revenues slumped 17 percent to US$114 million from US$138 million a year earlier as Over-The-Top (OTT) services such as Whats App and Viber eclipsed proceeds from voice.
Voice revenues unsurprisingly fell by 25 percent to US$73 million in the period.
Broadband revenues, which raked in US$33 million from US$28 a year ago, however tempered the decline, rising 18 percent.
Overall, broadband contributed a third of total revenues.
Plans are underway to improve the contribution to topline to half by 2020.
Cost-containment measures also cut operating costs by 17 percent to US$85 million from US$102,5 million in 2015.
Though TelOne forecasts a loss for the 2017 financial year, it expects to break even in 2018, while a US$17 million profit is targeted for 2019.
Management believes the completion of the National Broadband project (NBB), which will ably facilitate a switch from voice calls to broadband, will provide the much-needed leverage.
The NBB project is being financed through a US$98 million loan from China Export and Import Bank (China Eximbank).
Delays in closing the facility saw the project only taking off in 2016 instead of 2014. An estimated US$33 million has been drawn down so far.
TelOne says the general improved economic outlook is likely impact on the operating environment.
Engineer Shamu said: “The finalisation of the proposed clearance of the country’s debt arrears and new positive developments in nostro funding deficit, are expected to improve the country’s risk profile.
“This will translate to increased foreign direct investment and reduced cost of borrowing on both foreign and domestic credit lines.”
