LIVINGSTONE MARUFU
TelOne, a State-owned fixed telecommunications network operator, is pushing for a tariff review due to rising operational costs.
Board chairman, Douglas Zimbango told Business Times on the sidelines of the 9th Annual General Meeting (AGM) that the parastatal was in trouble and needed prompt government intervention on tariff review.
“TelOne (Private) Limited shareholders meet in Harare for the AGM amid acute operational challenges owing to exchange rate volatility, the consequent impact on the debtors book as well as the impact of delayed tariff reviews,” Zimbabgo said.
He added:”The industry and TelOne in particular is affected by the delay in approval of a tariff that is index linked to the United States Dollar (US$). The regulator approved a 50% increase in tariffs in February and April 2023. As of the date of the last tariff approval, the exchange rate was US$1: ZW$928 and has since deteriorated by 582% to US$1: ZW$6,326.
“Prices of all utilities such as electricity, fuel including taxes have been reviewed several times since the last review to the extent that it is estimated that a tariff review of at least 500% is required to cover the increased operating overheads.”
He said aggregate demand on the company’s products remained high despite the operating environment challenges.
Home Broadband recharges increased by 7% for the period under review in comparison to the similar period in prior year while bandwidth capacity grew by 12% in the first half of the year.
“Despite the challenges in the environment, which are threatening business viability, TelOne managed to post an inflation adjusted operating profit of ZWL$7.1bn up from ZWL$4.3bn achieved in the previous year,” he said.
TelOne operating expenses increased by 53% to ZWL$37.8bn in 2022 in inflation adjusted terms from ZWL$24.1bn in 2021 and this was mainly driven by the depreciation of the local currency which had a pass through effect on inflation.
TelOne’s cost to income ratio improved from 90% in 2021 to 87% in 2022 as the rate of increase in operating expenses was lower than the rate of increase in revenue.
The company recorded an inflation adjusted revenue of ZWL$56.8bn , a 36% increase on the ZWL$41.8bn recorded prior year and this was driven by a tariff adjustment that came into effect in the third quarter of 2022.
