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$98 Million Telone-Huawei deal delay raises question marks

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Chipo Mutasa, the TelOne CEO

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It seems the government may have to renegotiate the TelOne-Huawei Technologies deal for the rollout of countrywide fibre installations due to the depreciation of the telecommunication equipment with time since the commissioning of the deal in 2010.

This is due to the fact that both TelOne and Huawei have faced undisclosed challenges that have led to this delay. The challenges for Huawei aren’t clear, but it’s easy to speculate on the availability of funding as one reason for TelOne.

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In an article in Newsday, Chipo Mutasa indicated that the deal will still go ahead, but there will be need to revise the scope of the work as the 2010 equipment is definitely out-dated. Meanwhile, TelOne has had to implement some stages of the project funding it with their own resources.

This is an obvious strategy that any business would implement and rather impressive for a state enterprise as normally we would have expected it to sit and wait until all ducks are lined up. Perhaps that is how it is beginning to post profits with a promise of better times ahead under Mutasa.

The report further indicates that even staff had begun to notice the time-based discrepancy and alleged overpricing with some even suggesting that the potential prejudice in deal amounted to over 30%.

However, Mutasa defended the company saying there was nothing suspicious in the $98 Million deal itself outside of the highlighted challenges. She also said that the State Procurement Board had been involved in the awarding of the deal. Further, TelOne itself had conducted an independent survey and found that Huawei pricing was not overpriced and was in line with the market having compared with ZTE, Fibrehome, China Commserve and Alcatel Lucent.

This is the first time that we have heard of purported rot at TelOne since the new CEO came in but without defending her and the management, this could also be a backlash of the move to reduce salaries for staff among other measures implemented in fashion with the wave of dismissals triggered by the High Court labour ruling in the Zuva Petroleum case.

Another key thing to note is that technology does depreciate yearly and we hope that TelOne does not get sold outdated equipment and it can restructure the deal to stay current especially after a healthy take off this year on the tide of a successful 2014.


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8 thoughts on “$98 Million Telone-Huawei deal delay raises question marks

  1. I bet that 30% overpricing was factored in to cover some hand greasing and brown envelopes.

    Chinese likes it when they are the ones having there hands oiled not the other way round hence the delay l think.

  2. The probability z very hi that they r not just delaying but they actually abandoning Telone making deals elsewhere were they see better/meaningful opportunities than they see with Telone

  3. TelOne has very obsolete equipment while technologies move very fast ie from landlines and desk tops to iPads and twitters, whatsapp. The $98 million deal was consumated at night and in the gutter as zero transaparency was the norm, this entity remains a going concern ingohambe nge mudzimu plus the abiIity of both TelOne and GoZ to pay back loans at all and in time raises stinks. The operating environment in my homeland with no balance of payment support, FDI, corruption of massive scale, tingo hambe nge midzimu.

    1. in whatever case the world can never run away from landline technology unless you are some jobless dude who enjoys playing FIFA at home. Landline has a pivotal role in business rather than focusing on some expensive wireless technology which runs within a few organizations especially the service providers themselves, mind you they also have got the same landline systems and you should think outside the box. If you want to talk about technology make sure that you have enough knowledge along these lines, it will help you to avoid uttering nonsense in a gentle-men’s meeting.

    2. Telone doesnt not need to compete with desktop, ipads etc as you claim. Its not there area, they however need to beefup their core network so that they can provide reseller options to other local small isp who do not have the infrastructure or financial muscle to go their own way.

  4. Huawei is the main partner for Liquids fibre role out is it not? They lose nothing while eating from sources in the same country. Maybe this will bring Telone to finally build an all IP network and stop this back and forth between the old ways and the new tech.

  5. Take note: Huawei is an equipment vendor that is to say huawei will be supplying terminal equipment. Equipment cost for fibre projects constitutes about 10% of the project. The rest is for civil works and materials for civil works (Huawei does not supply any of these) i.e. Optical Fibre Cable(OFC), HDPE ducts, trenching, permissions from local authorities etc.
    By the look of things Im sure Huawei was given a turnkey project by Telone to the tune of $98m. Huawei will subcontract locals and other companies at low rates whilst charging double figures to Telone.
    What Chipo should do is to adopt the Liquid strategy: Huawei supplies terminal equipment, buy the OFC straight from the suppliers in China, get permissions from local authorities, subcontract local companies for your rollout. Ndiyo iya inonzi Zimasset neHurumende.

  6. Liquid rates are now 15k to 18k per killometer total cost to rollout fibre. How do we get to $98million?

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