Business Reporter
Restructuring of TelOne’s $34,7 billion (US$432 million) legacy debt, to improve the firm’s performance, is expected to be completed by year-end.
Minister of Information Communication Technology, Postal and Courier Services Dr Jenfan Muswere told TelOne’s annual general meeting (AGM) on Thursday he was confident the Government will soon resolve the issue.
He said the plan would involve warehousing the fixed telecommunication company’s foreign loans amounting to US$432 million in line with resolutions passed by the Cabinet in March 2019.
Minister Muswere said while the State-owned enterprise’s performance for 2020 was good, it had, however, been weighed down by onerous legacy obligations.
TelOne’s net loss before tax narrowed to $10,3 billion in 2020 from $35 billion a year earlier.
“The impact of the PTC (Post and Telecommunications Company) legacy loans on the company’s performance has been noted, and indeed the $34,7 billion legacy loan expenses have overshadowed the positive performance achieved at operating profit level.
“It is encouraging to note that the Ministry of Finance and Economic Development has already expressed willingness by the shareholder to warehouse TelOne’s legacy debt,” Minister Muswere said.
With a stronger balance sheet, he added, TelOne would be able to declare a dividend.
Warehousing the legacy loans is meant to allow restructuring of the company’s balance sheet and pave way for privatisation.
Last year, the company realised an operating profit of $523 million, up from $449 million in 2019.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 2 percent from $658 million to $671 million in 2020, driven by revenue growth and cost containment.
Staff cost-to-income ratio was within the prescribed threshold of 30 percent.
Inflation-adjusted revenue grew by 147 percent to $4,7 billion in 2020 on rising demand for broadband services.
Home broadband subscribers jumped 14 percent to 128 545 in the period.
Subscribers have since risen to 129 590.
“This development is key in that it resonates with the drive by the Government to increase access and utilisation of broadband, especially as a key driver for economic development,” Minister Muswere said.
Revenues from voice services declined 19 percent as subscribers dropped by 4 percent.
TelOne was also commended for generating its own foreign currency, although the earnings were still inadequate to cover its foreign currency-denominated bills.