TelOne Records $24.9 Million Loss

Increased usage of Over the Top Services weigh down revenue

Increased usage of Over the Top Services (OTT) at the expense of traditional voice calls have weighed down TelOne’s performance in 2016 with the telecoms company recording a huge US$25 million loss.

By Jeoffrey Ncube

TelOne Communications and Client Experience Manager, Melody Harry attributed the decline in revenue to increased usage of Over the Top Services at the expense of traditional services such as voice.

“The decline in the industry’s revenue is attributable to the increased usage of Over the Top Services at the expense of traditional services such as voice.

“This has resulted in a 19 % growth in broadband revenues from$800 million in 2015 to $950 million in 2016,” said Harry.

She added that legacy loans inherited from PTC continued to weigh down TelOne’s financial performance.

“Legacy loans inherited from the PTC amounting to $364 million continue to weigh down TelOne’s financial performance

“Interest charges arising from this legacy debt were $18 million in the period under review.

“The company incurred a further 41.4 million exchange loss on the legacy loans,” said Harry.

In an interview with 263Chat, Minister for Information, Communication and Technology and Courier Services Supa Mandiwanzira said he was disappointed by TelOne’s performance adding that government will play its part to see the business growing.

“The performance is disappointing to the extent that the loss have continued but there are various reasons to explain where we are right now, what we are very excited about is the fact that we can see the progression in the business we can see that there is a plan to deal with some of the issues that have resulted in the losses that they are making but we have to acknowledge that the business environment is very difficult at this particular moment,” said Mandiwanzira.

On the PTC loans, Mandiwanzira said, “About the legacy issue that the management have spoken about, which we are trying to address to the Ministry of Finance, l think government have a role to play and also the management board and the fact that they are owed millions of dollars also means that if they are able to collect the debts, they will improve and unfortunately the bulk of that money is owed by the government institutions, ministries and parastatals.

“I think if we can perform our part as government to see this business growing, we do have some issues that we will discuss with the Minister of Finance to see how we can extinguish the debt owed to TelOne and other government owned telecoms companies,” said Mandiwanzira.

TelOne is implementing the broadband project under a $98 million China Export and Import Bank loan facility as it seeks to shift from its traditional dependence on voice revenues.

According to the telecoms company, unforeseen delays in closing the China Eximbank facility have seen the project roll out only starting in 2016 instead of the initially planned 2014, limiting TelOne’s ability to offset falling voice revenue with broadband services.

The company is confident of breaking even in 2017 on the back of full implementation of its National broadband project.

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