Telecomms giants, Telone, say the continued tariff freeze is having a negative impact on its business operations as costs continue to be eroded by inflation.
The company announced last week that it registered a profit before tax and depreciation of ZWL3.2 billion up from ZWL1 billion achieved in the prior year.
TelOne revealed that ZWL2.1 billion was achieved during the period up from ZWL627 million achieved in 2020.
“This was against a balance sheet that is weighed down by legacy loans. These loans are hampering the sourcing of new funding to deploy low-cost structure LTE and Fibre technologies to replace costly to maintain and vandalism-prone copper-based technology.
“This is also exerting pressure on the bottom line with the excessive interest and exchange losses all totalling ZWL10.5billion, in inflation-adjusted terms, for the year 2021, “Melody Harry, Head of Corporate Communications said in a statement.
Despite all the gains, the lack of review in tariffs has negatively weighed down TelOne which has had to rely on last year’s ones which have been eroded by inflation.
“The last tariff review was in September 2021. When measured against the movements in exchange rates, for voice products the effective price was $0.07cents per minute after the tariff increase and it deteriorated by 19.3% to $0.058 cents per minute by 31 December 2021. As of the date of publishing of this report, no tariff adjustments had been approved for 2022,” Harry said.
Harry noted that revenue for the period grew by 134% in inflation-adjusted terms and 187% in historical terms, driven by a 5% volume growth in broadband subscribers and tariff adjustments of 56% for Voice and 38.5% for Home broadband, which tariffs were effected in September 2021.
Telone, according to reports from its Annual General Meeting, achieved a 220% increase in EBITDA from ZW$1billion in 2020 to ZW$3.2billion in 2021.
“Operating expenses increased by 112% from ZWL3.3billion in 2020 to ZWL7billion in 2021 in inflation-adjusted terms.
“This was mainly driven by the depreciation of the local currency which had a pass-through effect on inflation as most of the Company’s suppliers link their prices to negative movements in the foreign exchange rate on the alternative exchange rate market,” Harry said.
However, despite its gains, Telone was massively hit by vandalism amounting to $1,5 million in potential revenue.
