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Local internet provider, Powertel is insolvent

Powertel internet CDMA LTE

It’s not just the mobile network operators that are feeling the heat in the tough telecoms environment. According to a report from the Auditor General, Mildred Chiri, Powertel, a state-owned Internet Access Provider(IAP), is technically insolvent.

According to FinX, the report highlighted serious concerns at the Powertel that include its going concern status, some serious working capital challenges and liabilities.

Powertel is one of 23 state owned enterprises that experienced losses between 2012 and 2014.  In 2013 it recorded a loss of $164,558 and in 2014 another loss of $1,2 million was recorded by the IAP.

These figures highlight an ominous trend where losses for the internet provider have continued to widen in a tough economic environment where the disposable incomes of Zimbabweans have continued to shrink.

The string of losses puts in the same bracket with Dandemutande, the parent company of the Internet service provider uMAX, which has also been stuck in the red, albeit with a reduction of these losses being noted in the latest results.

To its credit, Powertel hasn’t been passive in all of this. There have been efforts from provider that included a $32 million investment in fibrea set of promotions launched for its internet packages between late last year and June this year, the introduction of an extended product lineup for internet and VoIP services and a second rebranding exercise that was meant to announce its energised and innovative approach to business. 

It’s yet to be determined how all these efforts will weigh in on Powertel’s attempts at turning its fortunes around. In an internet and VoIP provision environment that has reached new heights of competition from operators like Africom, Liquid and TelOne, Powertel will have to put up an aggressive fight for the remainder of this financial year if it wants to record a profit.

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17 thoughts on “Local internet provider, Powertel is insolvent

  1. SHUT IT DOWN! Let Tel One take over the infrastructure and customers. $165,558 losses in one year and then $1,2 Mil the next year. Someone should be jailed for that!

  2. PowerTel must close shop and hand it over to professionals, even Telone can take them over and do a proper job.

    There whole network is riddled with internet nasties. No one there seem to know what they are doing.

    Every worker at PowerTel doesnt seem to care about their work. The biggest sanctions being experienced in the country is laziness, and its all there to see in every gvt owned institute.

  3. headline says insolvent, first paragraph says that its solvent… which one is it?

  4. Powertel, Net*One and Tel*one need to join hands and deal with this once and for all. If the three were to become a converged telecoms company, they would reap serious profit.
    1. Net*one basestations and Main Centers = fiber backhaul from powertel and tel*one = access to undersea providers no need for high rates from Liquid or Africom etc.
    2. Tel*one = access to net*one base stations and powertel to revive the CDMA issue and offer migration path to VoLTE and GSM if they are going to dump CDMA
    3. Powertel = Access to GPON and legacy ADSL to cover more.

    It therefore seems like a no brainer that really the three should be one company. Econet + Liquid + ZOL + Steward + Econet Services + TPS = Econet Global

    Utande + iWay –> made sense IAP+isp now the isp probably pays bottom dollar for seacom access and well iWay always had great deals on bandwidth contracts with hellcom, i mean Telkom.

    1. Taking your Econet example then in effect Telone, Netone, Powertel, Africom (partially) and Utande are one company i.e. government.

        1. Africom has share holders who happen to work / represent government. Utande is a private company..

  5. And in 2011 didnt they record a profit of almost a million? Its not correct to have blanket statements that hide board and management incompetencies.

    1. That what lm always singing! Its jobs for the Party boys, not professional. If the gvt start to fire people for not performing then we will see a lot of positive changes.

      But everyone is gearing towards elections l do not see it happening.

  6. Powertel, a subsidiary of ZESA holdidings engaged a telecommunication guru, Magaya as there was doing well then, in 2013 there was a change in the board and everything turned dow. Rubien technologies should serve the collapsing telecom company. This comppany has history that we have to understand.

    1. The hiring of Magaya, and I don’t mean the prophet, was the beginning of problems for the problems for the company. Magaya’s earnings and those of the people be seconded to Powertel were a huge drain on cash flow as they were in excess of half a million upto the point he was terminated. While he was still there, Dzikamai Mavhaire was shuttled to the energy ministry after the GNU and he brought back Maminimini who had been fired at the instigation of Magaya. The whole thing was a complete waste of resources.

  7. Honestly peeps is this news? Dont you know the long proven equation of Zim Govt Parasites (Parastatals!) = Never Ending Losses! Half a billion of Obama’s finest lost in just 2 years wow. Check out this perfect loss making record adding up to losses of $469m draining the fiscus from 2012-2014 – Here are the loss positions for the respective 23 State firms between 2012 and 2014:

    CAAZ US$15m loss (2013)
    US$$24 loss (2012)

    GMB US$51m loss (2014)
    US$1,4m loss (2013)

    The National Railways of Zim US$32m loss (2014)
    US$49m loss (2013)

    ZMDC US$27m loss (2013)

    Nat. Radiation Authority of Zim US$395 196 loss (2014)

    Mbada Diamonds US$50m loss (2013)

    Marange Resources $1, 5m loss (2014)

    Powertel US$1,2m loss (2014)
    $164 558 loss (2013)

    Zimpost US$1,5m loss (2012)
    US$4m loss (2011)

    Courier Connect US$27 500 loss (2012)
    US$207 000 loss (2013)

    Agribank US$9m loss (2014)
    US$5,6m loss (2013)

    Hwange US$30,9m loss (2013)
    US$37m loss (2014)

    Zesa Enterprises US$7m loss (2014)

    ZARNet US$290 000 loss (2013)

    Jiang Mining Private Ltd US$28,4m loss (2013)

    Capital Bank US$60m Cumulative loss (2012/13)

    CSC US$10m loss (2012)

    NetOne US$4,8m loss (2013)
    US$5,9m loss (2012)

    National Arts Council US$146 280 loss (2013)

    Zim National Family Planning Co US$2m loss (2014)
    US$1,6m loss (2013)
    US$1,9m loss (2012)

    Ingutsheni Central Hospital US$1m deficit (2013)

    United Bulawayo Hospital US$5m deficit (2013)

    ZIA US$28 400 deficit (2013)
    US$206 000 deficit (2012)

    US$469 million total

  8. If this is true its sad.
    Now the Hon Minister was talking of sharing. How do you get companies sharing with insolvent companies?

  9. Very disheartening indeed that our leaders are not very financially literate when it comes to the principles of running a business let alone an economy profitably. Wealth is not created by slogans empty promises and lies, that’s why it is impossible to “rig” an economy. Financial illiteracy arises when parastatal bosses fail to realise that every one of those dollars in the $469 million losses is money lost for good, its no different to getting a loan facility of $469 million from the bank, withdrawing all of it as cash, then pouring petrol on it and setting it alight and watching it burn into ashes. Then doing the same thing next year and justifying it by saying “we want to secure the future of Zimbabweans because this way the parastatal remains in Govt hands the custodians of the people’s economic wellbeing”. No-one gets punished and new shiny vehicles are purchased and generous exec loans are advanced to non-performing parastatal CEOs and their teams every other year. For goodness sake use your brains, privatise some of those parastatals, it will create an immediate hefty cash injections into the fiscus as private capital will bid high to get a controlling interest, and thereafter private capital will provide inject sufficient recapitalisation funds and focus on profit generation which is the only guarantee to healthy tax inflows for Govt as well as employment generation and economic growth, some of the major pillars of ZimAsset. Isn’t that a better option for the good of the economy and the people of Zim than sustaining 23 loss-making parastatals bleeding 235m per year in losses? Zim is not going to get the expected FDI inflows by demanding that wealthy Asian/Middleeast/European/American investors to part with billions of $$$ for only a 49% stake. Take a leaf out of SA’s BEE book, there are other ways of empowering black people without choking out your own investment prospects with half-baked indigenous legislation that doesn’t actually bring in the expected investments. You only have to visit SA next door to know that they are flying in a rapidly changing world economy and we are totally down and out in Zim, fast asleep chaiyo and no hope of waking up any time soon. Based on the corporate laws of Zim, even a 2% change in the indigenisation threshhold allowing foreign investors to own 51% would actually create a torrent of investment into the country as 51% is what allows the investor to control the board, and therefore the strategic direction of the company. The country and indigenous people would still benefit infinitely more from a 49% or even 40% or 30% stake if the investment funds actually come in, than hoping to benefit from a 51% indigenisation stake where the funds are not actually ever going to come. Better to have 30% of a $20 billion investment into Zim that will sort out Agriculture, Manufacturing, Transport, Banking, Services, Tourism, Construction etc while creating excess jobs that will attract even expats and diasporans back, than 51% of the $410 million that trickled in for 2014. The indigenisation bill is actually creating a phenomenon of underhand deals where foreign investors are making deals that on the surface appear to adhere to the 49% foreign stake threshhold yet behind the scenes they effectively have 70% or 90% due to various under-the-carpet “gentlemen’s agreements” and the only ones benefitting from this are the usual high level officials in Govt. Kana zvinhu zvakadhakwa lets admit zvakadhakwa and start making the changes necessary to lift this once proud and productive nation. It’s not about who is in power, it’s about what they in power are doing to steer Zim where it belongs as the top performing economy in the region – this was actually reality at some point in the past when Zambians, Malawians, Mozambicans, and European expats saw Zim as a primary destination for long term employment. I know most Zimbos personally don’t mind who of the various “factions” or “sub-factions” is calling the shots so long as they do right by the economy. Isn’t it sad that had the parastatals made a break-even (nil loss nil profit), the $469 million loss made by parastatals in 2013-2014t could have been used to dualise the Harare-Masvingo-Beitbridge highway, or recapitalising NRZ, or laying totally new roads all over metropolitan Harare and bulawayo, or relaying new water pipes and treatment plant for Harare and Bulawayo. But no-one sees it like that in Govt…

  10. What happened Powertel needs new consultants or information to survive the wave that is Liquid/Zol. Before it seemed to keep its head up in the face of competition.
    But issue is all these companies in Zim talkimg disruption are anything but. They hire the same people from another poached telco and when they hire innovative people the managers are either threatned and frustrate them or B they scare people into fear of innovating. Africom is doing better by trying to stay af;oat and think outside the box.

    1. What use is a consultant? Consultance must be a one off where you get someone, say for a week to look at special areas where your professionals are struggling.

      To begin with, Powertel doesnt have the professional to to make their network competative.

      Like al gvt owned companies, powertel needs to open up and hire people who can actually to the job.

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