Powertel refutes insolvency, points to strong cashflow & unique advantages

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The recent report from Zimbabwe’s Auditor General on the viability of Powertel, a state-owned Internet Access Provider and subsidiary of national power company, ZESA Holdings started a string of comments about the poor performance from Powertel and other parastatals in general.

Powertel, on the other hand, is refuting this insolvency tag. In a press release, Powertel is highlighting its significant growth over a period of more than 15 years, with reference to investments in telecoms infrastructure (its fibre investment comes in here), voice services, internet and more importantly, prepaid electricity aggregation through the brand Powerplus.

While no figures have been thrown in to highlight the “profitability” or revenue potential of its services like retail internet and infrastructure deployment, the prepaid electricity aggregation looks like the shining star for Powertel.

According to Powertel, over 73% of the current electricity revenues are being covered through e-vending. Thanks to a variety of channels that include POS terminals, mobile phones and ATM platforms, electricity distribution throughout Zimbabwe has been made a lot easier.

Powertel makes 1% of each of these transactions, which seems like a decent figure, considering the huge amount of traffic that is being generated from prepaid electricity and it’s a strong depiction of cash flow. That, plus the fact that Powertel is the only aggregator being used by ZESA, is a huge advantage in a business environment that is struggling in terms of liquidity.

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There’s no doubt, prepaid electricity is giving Powertel a cushion against a lot of turbulence that is being experienced in local telecoms and broadband. Which begs the question,  why hasn’t the service been opened up to EcoCash and Telecash? If mobile money is a very visible contributor to that 73%, why not expand this to the two largest mobile money services in the country?



5 Comments

  1. Garikai Dzoma says:

    I am sorry but as an accountant I cannot believe the lame excuse Powertel is offering may be the people making the excuse do not understand the meaning of the word insolvency!

    What it means is that Powertel’s liabilities (zvikwereti) are more than its assets (zvinhu zvavainazvo) including that fiber with they are talking about. It means they are not just making losses it essentially means they owe people money and were it for the government Powertel’s would be facing the guillotine.

    To justify such a terrible record is criminal in my humble opinion. The least they can do is to hold their peace and hang their heads in shame. Instead they are looking at other equally pathetic parastatals and saying “We did better than them?!”

  2. macdchip says:

    You raised a very important point!

    “..why hasn’t the service been opened up to EcoCash and Telecash…”

    If our ICT minister doesnot want to reap where they did not plant, why is he not looking at this?

    Why is the gvt only interested taking positions which looks like it benefits them direct quickly?
    Why not give business to your other Zim owned private business?

    Makaro?

  3. Net Neutrality says:

    This is a clear case of the government trying to cover up their arses. I dont see Powertel being profitable in the near future. In this day and age you need to push volumes more ie it is better to have $30 unlimited internet for 10 000 people than $100 Unlimited internet for 30 people. I wonder how these guys make their decisions!!

  4. Thomas gapa says:

    Powertel seems to be doing very well hey. I see the decision of prepaid service is common sense hey. You don’t have to be popular without making decisions correctly. Who is still having unlimited in this world and makes business sense. environment is tough and these guys are doing best. It shoW’s they are marketing and pushing hard. Do your best guys.

  5. Nyasha says:

    Powertel is sitting on ticking time bomb, soon they will be talking about laying of workers because of poor management decisions. Their products are also ridiculously priced, I wouldn’t be surprised if they are operating from a loss position to try and get ahead of the competition. In my opinion they should just merge with Telone and operate from a consolidated position.

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