Treasury, through Government Ministries, owes NetOne more than US $6 million… Effectively, NetOne is subsidizing defaulting customers, whilst NetOne management is being cast in bad light in Parliament and in the media. A number of parliamentarians and Senators owe NetOne since 2009 and had not paid up to now.
These were the words of NetOne Managing Director, Reward Kangai in an interview carried out with the local state owned weekly newspaper The Sunday Mail recently. According to Kangai, NetOne, itself a state owned mobile operator, is owed some US $30 million in debts an amount whose provision in their financials constituted much of the loss the company has made.
NetOne was said to be technically insolvent by its auditors after it posted a $14.4 million loss in the in the full year to December 2010. The mobile operator is also failing to pay annual license and spectrum fees to the telecoms regulator, Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ).
Another contributor to the loss the company made is the expensive money it borrowed to finance operations. According to Kangai, NetOne is unable to borrow from its traditional sources and had to find other sources where it got interests rates as high as 30% per annum. NetOne owes large amounts of money to its original funders when it set up the network back in 1996. These include a German government owned development bank called KFW (same one financing Econet), Standard Chartered Bank UK, and ING Bank of Tokyo.
Some legacy debts it took over when the government disbanded the Post and Telecommunications Corporation (PTC) into; TelOne, a fixed telecoms company trying to make a comeback via broadband internet); Zimpost, a postal services company whose relevance is waning, and NetOne. “There were huge debts,” said Kangai in the interview, “We had to find a way of distributing the liabilities of the former company.”
NetOne,is currently the country smallest mobile operator by number of subscribers, with just over 1.6 million active subscribers. Its competitors, Telecel and Econet, have 2 million and 6.4 million subscribers respectively. NetOne recently signed a telecoms equipment deal for 2,000 base stations worth US $200 million with major Chinese telecommunications equipment and services company Huawei Technologies.
Share
Home
3 comments
This is ridiculous! Kangai is saying a lot of nonsense, and even shooting himself in the foot.
If an unemployed youth walks into a Netone office he is sold a prepaid line/simcard and not subscribed to Netone’s post-paid plan because he is assumed not to be able to pay, and a risk.
The same Netone folks will welcome a government official in a nice suit who will run up debts of over $1 million, when he has no means to pay, just because he was wearing a suit.
If Netone treated all Zimbabweans equally (democratically) and made them all prepaid customers, none of this would have happened.
What does it say when Netone, under Kangai’s leadership lets government officials accumulate huge debts, a priviledge which even the common unemployed man in the streets does not have?
And remember, soon after dollarization, the same institution, even now, published threats of credit blacklisting of many poor Zimbabweans who cannot even afford to sue Netone, with the Netone demanding those poor Zimbabweans pay up. Why doesn’t Netone do the same thing?
It is very clear that Mr Kangai and his team have failed Netone and now they want to blame government officials. Why did he not make sure that everyone who buys a Netone simcard is on the prepaid plan?
Netone, and its cousing Telecel, also owes Econet lots of money.
Normally, when incompetence is the real cause, any scapegoat will do, be it government officials, sanctions, Cholera, Britain, TB Joshua, and even Chinos.
And obvious, before all this, and before “2009” it was “the harsh economic environment” that was the problem, when Econet was doing well during that same time.
This is very disappointing, especially if you are a taxpayer. In my opinion it is high time the government hired a replacement of Strive Masiyiwa’s calibre, or even better.
MTN in South Africa, a government-owned mobile operator grew into a US$15 billion-a-year multinational business, yet Netone pales in comparison and even still struggles with just US$6 million and still talks of millions.
Netone even struggles to serve the whole of Zimbabwe, yet Econet, which started with less resources, and long after Netone, has gone far and beyond. MTN, as it stands, has revenues (US$15billion), greater than Zimbabwe’s entire annual output, which is just about at US$8 billion. can you imagine if Netone has done that? Kangai would be a national hero!
And to think Netone was given a headstart in the mobile business while a common man, Strive Masiyiwa was locked in a battle for a mobile operating licence with the government.
It should say a lot about encouraging real and genuine entrepreneurs and entrepreneurship.
Finally, the man (Kangai, MD Netone) says
Kangai needs to read more books and more often. Netone IS NOT subsidizing customers, it is actually PRE-PAID CUSTOMERS, – the millions of struggling Zimbabweans who are kiya-kiyaring who call Netone from other networks (mostly Econet) and even have Netone lines, and Econet which Netone owes money, – who are subsidizing those “defaulting” customers Kangai and his team have allowed to exist on Netone’s customers list.
I doubt there is preferential treatment relative to the man-on-the-street, but rather by political duress. Kangai, even if he had a speck of non-corrupt behaviour, would be powerless if confronted or demands are made by those within his party. The issue is higher up and deserves intervention from the top-dogs. I mean ministerial and Presidential level. Kangai is Zanu. Within Zanu there are people that are structurally higher than him….If they say, “shut up, this is government business, am not paying a $2,500 fine! After all, who are you?”,he folds in his tail and whimpers off.
So the problem is higher than Kangai. Anyone who has served in a parastatal knows of the frustrations. Competency of that person can only go so far and cannot save them from corrupt practises that milk these companies.
This has been a perennial issue with NetOne since the days of line shortages. And many such issues have been reported repeatedly in the media. All parastatals have failed to break even or have their profits consumed because of this (think AirZim, TelOne…etc)
The general public makes up a very small percentage of defaulters. It is the “high-suits”
[…] A recent report by POTRAZ also shows that NetOne and Telecel combined have less than 40% infrastructure while Econet has more than 60% telecoms infrastructure. Econet has also been posting massive profits in recent years, something NetOne has not managed. Figures made available to the public show losses in the millions. Ofcourse some of them not of their making. […]