NetOne bets on cost management strategies and new products for network turnaround

NetOne, the State owned mobile network operator recently shared some of its performance numbers for the first quarter of 2016.

Though the company recorded a rise in revenue from $44, 3 million in the first quarter of 2015 to $48,5 million in Q1 2016 its overall performance has been weighed down by factors like an increase in overheads.

According to the Financial Gazette NetOne chief finance officer, Sibusisiwe Ndlovu told the Parliamentary Committee on ICT that NetOne’s overheads increased from $20,6 million to $23 million in the first quarter of 2016. This increase was caused by “additional company units which were not being factored in in prior periods”.

The increase in gross profit to a quarterly figure of $34 million was a result of reduced cost of sales. NetOne’s Earnings before interest tax and depreciation (EBITDA) dropped from US$11,3 million to US$8,5 million and it closed the quarter in negative territory with a $2,1 million loss.

Despite an increase in revenue and the subscriber increase streak that it has maintained over the past year NetOne still has a lot of work to do to if it wants to become a profitable network.

Other than the need for improved cost management strategies the operator needs to unlock value that lies in an improved network and the country’s second largest mobile subscriber total.

Brian Mutandiro, NetOne’s acting CEO who addressed parliament on the operator’s latest figures is optimistic about the MNO’s chance at a turnaround.

In his statement he mentioned management techniques that include the reduction of costs associated with energy consumption at the network infrastructure level and value addition for subscribers through new products that will be launched in the second half of 2016 along with a series of product campaigns.

According to Mutandiro, NetOne, which is now less congested, has a better quality network than its competitors and this was enabled by an increase in the cost per minute (NetOne revised its star promotion Dollar a Day). This means it has the capacity to launch new products.