The Sunday Mail
In 2016, mobile network service provider NetOne was embroiled in scandalous reports, with allegations that its management, led by then chief executive Mr Reward Kangai, was involved in questionable transactions that inhibited profitability. The Sunday Mail’s Brian Chitemba spoke to the parastatal’s acting CEO, Mr Brian Mutandiro, regarding the new course NetOne has taken.
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Q. You took over as acting CEO of NetOne in March 2016. What is your overview of the company’s operations?
A. The company has a lot of potential and I am confident that with the ongoing restructuring that started in 2015, we will be able to exploit all existing and future opportunities. The restructuring exercise brought in a team which is energetic and result oriented which is blending well with personnel who retained their posts and have the institutional memory.
We spent the year 2016 grappling with a lot of legacy issues, for example the organisation incurred a lot of costs due to penalties from Zimra, the State Procurement Board and other statutory bodies.
These were due to non-adherence to laid down procedures. Going forward we will make sure that there is full compliance to avoid such penalties and unnecessary expenditure. We quickly put in place several corrective measures and embarked on a transformational process to turn around the business.
At the centre of all this we are diligently upholding corporate governance principles and have significantly strengthened the internal control environment in line with best practice.
Q. In the face of all this, what was your immediate strategy to get NetOne back on its feet?
A. The immediate priority was to engage a very important stakeholder, the employees, and communicate our expectations. They got a chance to share their views on how they felt we could become a leading player in the telecommunications industry within the shortest possible time. At the earliest opportunity we got, we introduced quarterly employee briefings where we as the executive went to all our operation centres meeting all employees and articulating our strategy and vision. These briefings also served as corporate brainstorming and idea sharing sessions.
We have empowered the staff to participate and have given them autonomy to be part of the journey to the top. This initiative has brought greater visibility and transparency to organisational operations and the staff greatly appreciate this. Another game changing initiative was to split our market into five zones led by zone commanders who are overally in charge of these geographical areas countrywide.
The legacy NetOne was a dichotomy between the head office and the rest of the employees.
We, therefore, picked up that this dispensation led to uncertainty and inertia in implementing the vision of the organisation by all concerned parties. After having looked at our staff as a critical stakeholder, we then focused on our subscribers who are the reason for our existence.
For instance, a critical group in this digital age is the millennials who are data centric and are the future in the explosion of ICT services. I am happy to say that we have pried open this lucrative opportunity by successfully introducing unique product offerings such as OneFusion. Instead of purely rolling out base stations around the country, we also started paying adequate attention to demand fulfilment initiatives to increase customer satisfaction and enhance the user experience with our products. We made a deliberate effort to compliment network centricity with being a customer centric organisation.
The low hanging fruit was to quickly find alternative sources of revenue growth to cushion against declining contributions from traditional voice and SMS as a result of competition from Over The Top services (OTTs) like WhatsApp and Viber. The strategy is, therefore, to optimise underutilised capacity in our cutting edge LTE network.
Q. NetOne has not been making as much profits compared to other players in the industry. What is the main cause of lack of such profitability and what measures have you designed to turnaround the company, including the key areas that need urgent attention?
A. One of the major legacy challenges we were confronted with was our over-dependence on one package, namely, Dollar-A-Day in its original format. This package was offering mostly voice at a give-away tariff of close to 1cent/minute whilst the other operators had an average tariff yield of about 12cents/minute.
In this scenario the network was subject to severe congestion and network resources were stretched without commensurate revenue benefits. Within two months of my being in this position we overhauled our product structure to make the Dollar-A-Day package an optional offering rather than an automatic benefit.
The immediate impact of this was a significant improvement of our average tariff per minute to 8cents and decongestion of network resources which enabled the network to offer high quality revenue generating products. The business is now geared for profitable growth. We now have additional capacity to launch other value added services which have become favourites for subscribers. With this rebasing of our revenue structure we laid a foundation for a turnaround.
The other challenge was to look at some of the systems that were highly problematic for example the one One Wallet (mobile money platform), as you are aware it was the first in the market with a potential first mover advantage but somehow we lost it and the market is now dominated by other players.
However, I’m pleased to tell you that we have a game changer coming soon, watch the space.
Q. Based on what you are saying, are we going to see immediate positive impact in your books of accounts?
A. Our books are currently being audited and we will talk once they are done, suffice to say there are positives in some of the areas as we continue with the journey.
Q. What is NetOne’s current subscriber base and share in the market and what is your target in the short to long term period?
A. The latest official report available is the Potraz Q3 sector performance report for 2016. It is very impressive as it reflects positive results on our turnaround. Our total subscribers are now over 5, 7 million and our active subscribers jumped to over 4, 6 million and there was a 2,4 percent increase in active subscribers from the previous quarter.
Our market share has increased to about 37 percent, and bear in mind that at one point NetOne had a 14 percent market share. Our intentions are very clear, we want to regain the top spot where we belong.
With the current stampede of subscribers migrating to NetOne it is very possible to achieve our target.
We need to justify the investment that Government has made towards the network expansion drive which we are grateful of.
Q. What products do you have that make you think you will provide value to consumers?
A. As NetOne, we have been pioneering in providing cutting edge communication technology solutions for individuals and corporates. Under the corporate and enterprise solutions, we have our Post-paid platform that is servicing a number of organisations nationally and Government departments.
We have the biggest share of the post-paid services in the market. At NetOne we take business seriously and we offer support services for business enhancement like toll free services, bulk SMS facilities and fixed wireless terminal that keeps business connected.
Our Prepaid platform offers a range of connectivity solutions for Voice, Data and SMS. We have amazing packages like Dollar-A-Day, OneFusion and the recently launched Mo’ Data campaign that has shown the market our extremely competitive data provision capabilities. On the Value Added Services, OneMusic is bridging the digital divide and providing entertainment on the go and the demand is rising as we approach Valentine’s Day.
Q. You mention OneFusion; there has been a current frenzy all over about this, may you kindly explain what this really is?
A. OneFusion is a popular product from NetOne which is very affordable and offers an all round access to communication services. We are now in a digital age and technology needs to be easily accessible.
We have been given a mandate to operate in the telecoms sector and we are cognisant of the fact that we should change lives through empowering our citizens.
Through, OneFusion Zimbabweans get value for their money through affordable rates and quality service. The bundles start from US$5 all the way up to US$200.
One Fusion’s cheapest offerings are the US$5 which grants subscribers six times more than what is being offered by competition. For a period of 30 days, we offer 60 on net voice minutes, 18 minutes to other networks, 300MB data, 700MB Whatsapp bundles, 900MB Facebook bundles and 10sms.
The larger offers from US$50 upwards also include international voice minutes. OneFusion is a lifestyle centric service that resonates with the trending demands of the 21st century subscriber.
The OneFusion package is revolutionary and I urge every Zimbabwean to join this robust package that is flexible enough to accommodate any budget.
Q. How has been the market response to this generous product?
A. It has been exhilarating and beyond our expectations. We are humbled by the confidence that Zimbabweans have shown to the revamped NetOne by stampeding for our lines ever since we launched this product. This is the most affordable package in the market.
Additionally, subscribers are finding our “Switch” campaign convenient. In this campaign we are providing special numbers by matching the last six digits of their old number.
Within a few months of market entry, OneFusion was awarded the integrated promotional campaign of the year 2016, exceptional new product of the year 2016, 1st runner up and creative advert of the year 1st runner up at an awards ceremony by the Marketers Association of Zimbabwe.
At the same event, our marketing executive, Juliet Ziswa, also got the Marketer of the Year (2016) Award.
These positive endorsements by the market highlight the impact of the restructuring exercise at NetOne.
Q. We understand the Zimbabwe Anti-Corruption Commission descended at your offices to do an investigation after media reports suggested that your line ministry hand-picked a Chinese company to Investigate Huawei and the company was paid US$4m. Is NetOne management independent of interference from Government officials?
A. Government is our major shareholder and we are aware that they expect profitability from us. Our ministry has been aggressive in pushing a positive and developmental ICT agenda nationwide, cognisant of the catalytic role that ICT plays in economic growth as well as promotion of financial inclusion for all the citizens of Zimbabwe.
In this regard, we have collaborated with our ministry and Potraz in bringing ICT products and services to marginalised communities. In my view, this is progressive engagement with the shareholder. This is not interference.
Therefore, it is incorrect to say that our parent ministry interferes with our day-to-day operations. We have a competent board of directors that plays an oversight role in our vision and mission to be the number one again. In addition to that, I have a young and capable team of executives who are giving competition a run for their money.
I am a product of the private sector and proud to have had the opportunity to utilise the experience and exposure I obtained from Coca Cola -Delta, Innscor and TSL. I am simply imparting my little contribution at the state enterprise, as we play our part in accelerating socio-economic development.
Q. And on Zacc…
A. That’s where I’m getting to now. Zacc came to our offices looking for evidence of a payment of US$4 million based on misrepresentation by some misguided elements for reasons best known to themselves. We were happy to hand over all our documents to Zacc.
The originators of the dossier were malicious as this turned out to be a fictitious allegation. There is no way that such an amount of money could move without our central bank noticing, putting into consideration the tight regulatory systems in place. However, such things happen in as much as we may not have answers to why they happen.
We should remain focused on the cause of turning around NetOne, those efforts will also contribute to the growth and development of the national economy.
We will neither be deterred nor distracted but will keep our eyes firmly focused on the ball.
Q. The NetOne board conducted a forensic audit on the previous management which was led by Mr Reward Kangai, which unearthed flouting of tender procedures and misappropriation of funds. An example that comes to mind is payment of a US$6m advance to a foreign firm, Gemalto, only to reap revenues of US$51 000. What have you done to implement some of the audit recommendations and avoid such things from recurring?
A. The audit highlighted a lot of weaknesses in the control environment of our business and I am happy to say that we have addressed most of the weaknesses and have introduced policies and procedures that enhance good corporate governance. For instance, we have already regularised more than 20 contracts with the State Procurement Board.
We now have four qualified Chartered Accountants in our Finance department. We have also brought in private sector experience in most facets of our business. In addition we have finalised our 2016 accounts which are currently being audited.
We are planning to have our first ever Annual General Meeting in the second quarter of the year.
