PHILLIMON MHLANGA IN BULAWAYO
State-owned TelOne (Private) Limited is burdened with legacy debts totaling US$390m as of the end of January this year.
Lawrence Nkala, CEO of TelOne, made this revelation to the media at the beginning of a two-day engagement with the corporation.
According to him, the legacy loan book continues to be a burden on the State entity’s balance sheet, impeding attempts to attract new funding needed for projects including network modernization and digitization.
“As at 31 January 2024, the legacy loans amounted to US$389,955,551 (US$390 million), translating to an equivalent of ZW$4.2 trillion. The legacy loans were inherited from PTC at the unbundling of the predecessor company in 2000,” Nkala said.
He added: “The loans had been secured by PTC in the 1980’s and 1990’s to fund various infrastructure projects, which had since become obsolete at the time of the unbundling.
“TelOne’s Balance Sheet is as a result in a net liability position. The legacy loan book remains an encumbrance to our balance sheet that is hindering our efforts to attract fresh capital required for network modernisation and digitalisation projects.
“TelOne has been engaging the then shareholder, the Government of Zimbabwe for several years (dating as far back to the year 2015) to facilitate debt warehousing in order to free up its balance sheet and make the company more attractive to investors and lenders.”
Nkala also revealed that TelOne was owed more than ZWL$200bn with Government department responsible for almost 80% of the the entire debt.
As a result, this has created cash flow challenges.
“Currently TelOne is owed about ZW$200 billion by its clients and the government departments and ministries make up at least 80% of the debt.
“Failure by Government to settle its bills timeously creates significant cash flow challenges and consequently hampers the company’s ability to settle its obligations.
“While several efforts including the introduction of pre-paid billing and cutting off defaulters are being employed to improve collections, it remains key that Government departments prioritise TelOne on their monthly payments.
Nkala also said the parastatal was hit hard by vandalism of TelOne infrastructure.
In order to combat the vice, TelOne has partnered with the country’s tax collector, ZIMRA and the police and other sate security agencies.
“TelOne is facing serious theft of copper cables and other network elements across the country. The Theft and vandalism has been so rife, that it has become one of the top threat to sustainability of the TelOne business,” Nkala said.
He added: “ While Harare has been significantly affected by this vice, mining towns like Kadoma, Kwekwe and Gweru have also been hit hard, with some areas going without service for months.
“In 2023, almost 50,000 TelOne customer were at some point affected by down time due to network theft and vandalism. During the year, Harare recorded 126 cases, followed by Midlands which recorded 75 during the period under review. Matabeleland North had the least number of attacks recording 4. The number of arrests during the period amounted to 38 while only 4 convictions were recorded. The value of vandalized network for the year 2023 stood at around US$1m.
“The replacement of the copper network which is now outdated and continues to be subjected to widespread network vandalism has become urgent.
TelOne has partnered with the Zimbabwe Revenue Authority, the Zimbabwe Republic Police, and other state security agencies to step up patrols at the country’s borders to control the smuggling of stolen copper, while lobbying for legislation review and community sensitisation are also being employed.”
