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NetOne posts $5.8 million loss against a 13.8% revenue increase in 1st half of 2015

Zimbabwean telecoms, NetOne, Zimbabwe, EasyCall, Harare

NetOne, the state-owned mobile operator and the country’s second largest network by subscriber numbers has published its unaudited financial results for the half year ended June 2015 in the Sunday Mail.

This is the first time that NetOne has published its results, and according to the opening remarks contained in the presentation, it is in line with recommendations of the National Code on Corporate Governance. NetOne follows the steps taken by TelOne, another state-owned telecoms operator that published its affairs last month.

Comparison against the same period last year showed a 66.4% increase in network investment to $5,593 million, a 28% increase in subscriber numbers to a 3,556,688 total and a 13.8% increase in revenue to $57,824 million compared to the previous period’s $50,805,311. NetOne’s total equity and liabilities stood at $486,059,212.

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The red flag for NetOne’s figures, however, was the $5,867,439 loss during the period. In the statement from NetOne’s board Chairman Alex Marufu accompanying the results, he highlighted a number of factors in the operating environment as challenges to the revenue generation capacity of the mobile operator.

These included the decline in disposable income, the 5% excise duty introduced in 2014, the 35% tariff reductions in effected in January 2015 and the introduction of a 25% customs duty on mobile devices.

This is the same deadly cocktail of challenges that Econet Wireless, the country’s leading mobile network and NetOne’s biggest rival has been lamenting over the past year and outlined in its own weakened financial results earlier this year.

Econet has gone further to isolate the negative role of regulatory interference in creating a non-conducive operating environment for telecoms operators, something that NetOne, as a State enterprise, might not have done so explicitly in its own financials, even though it acknowledges these factors as setbacks.

NetOne, however, is leaving the blame on the door of broadband investment, having identified the net loss as having been,

weighed down by a substantial investment in additional spectrum required to make the commitment in ZimAsset to provide ubiquitous internet connectivity a reality.

This is a reference to the efforts behind the $218 million 4G/LTE project which has placed NetOne as the holder of the widest LTE network in the country. This same project highlights a huge part of netOne’s future strategy which, according to this latest statement, is geared on network utilisation and product diversification.


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15 thoughts on “NetOne posts $5.8 million loss against a 13.8% revenue increase in 1st half of 2015

  1. How much is going to wages?

    They have already started milking, saping and looting away that Chinese loan, next the gvt will force it through “law” to be taken as national debt and the circle will restart again.

    Insanity:
    Is when you do the same thing again and again but expecting different results.

  2. LTE is not the reason for the loss. The period under review no depreciation for LTE equipment if charged. Capital expenditure does not result is losses. It goes straight to the balance sheet.

  3. And Netone cries, its ZIMASSET causing the loss. I bet no one @ Netone has read the document. Its political garbage anyway

    1. That is the problem with these political companies. They are never run based on business principles but political slogans.

      What does zimasset got to do with making a call or expanding network.

      This statement should have been released or read at political rally than being posted as business outline.

  4. The major factors affecting Netone include, the continued subsidising of gvt entities that are not paying for services rendered, the legal debt from Telone and Zimpost which netone inherited in 2001, the huge costs of borrowings to finance expansion fortunately for Econet it managed to rake huge revenues around 2010 to 2012 when the telecoms market was not saturated and the average revenue was around $10 and lastly the payment of tax on uncollected revenue from defaulters. About the allegations of stifling the money from the loan i dont know how this caaan be possible since the deal only involves equipment valued at $218million and not cash. China Exmbank is paying Huawei the cash and not Netone, so how can the funds be abused.

    1. “.. gvt entities that are not paying for services rendered..”

      So this is what you have been advocating to be extended to Econet through the infrastructure sharing?

      Gvt entities(read ministers) have been assert stripping companies assets, now they have sucked dry all gvt owned companies they are looking for way of getting into private locally owned companies!

  5. I never advocated for anything like that. The kind of infrastructure sharing i was advocating for is on a one on one basis, nothing for free. But then you acted as if Econet is being stripped of its assets. You should read the draft infrastructure sharing rules in order to be better guided before you argue. The draft talks of decommissioning of two out of three towers put at the same site and Strenghtening the other tower so that it carries up to 4 operators. It also talks about deploying the other two towers to unserviced areas where the operators can also share. Where possible players are urged to share the existing infrastructure on purely commercial terms agreed to by all . With regards to new towers being erected they should stand on 4 legs and they should be designed to best engineering standards to enable sharing should need be. Now lets not argue for the sake of arguing and lets not put words in people’s mouths. If u have to argue put facts on the table and quote from the draft the contents of it or even from your sources not just to speculate . Here u were talking about money from the loan being abused , again an allegation which is unfounded but u never had sight of the contract agreement between Netone, Huawei and China Eximbank. For the record let me put to u in this way. In order for netone to implement this major broadband project it is setting up an additional 668 towers or sites accross the country with 500 diesel generators and an equal 668 battery and rectifier system for back up. Of these sites only 175, 60 metre towers are financed through the huawei deal yet they should have been 350 towers initially. The reason being ZTE, econet’s technical partner clandestinely wrote a letter to the Ministry of finance wanting the contract and implying that they can reduce the huawei cost of equipment several millions yet they fully knew their equipment is not compatible with Netone system. The motive was to delay the implementation of Netone’s project and utimately caused Finance to cut the loan figure from the initial $290 million to $218 million therefore Netone had to reduce some equipment from the contract to cater for the reduction of the loan and that included cutting out 175 turnkey towers, 60 easylite solar powered sites for remote areas, eguipment for the third switch which was to be installed at Cleaveland , customer terminals, 30 4 by 4 vehicles for project implementation and the construction of the switch site and new netone head office to be built at Cleaveland. As u know passive infrastructure like towers cost a lot of money for example $170 000 for a 60 metre tower and roughly $100000 for a 30metre tower and take the longest time to construct Netone was then forced to finance this equipment from its own coffers and that led to significant cash going towards that hence the resultant loss despite an increase in revenue. The letter from Zte was both sinister and driven by malice and a desire to maintain the status quo of maintaining a monopoly in the sector arising from lack of funding on the part of Netone and Netone alleged that their competitor was behind such moves and also the court process by one bogus businessman alll of which delayed the project by more than a year.

    1. I did also read about zimasset, its a marvelleous document which clearly shows how our economy is going to be rebuild in 5yrs!

      You see, thats the reason why l glaze over anything produced by our ministers and their blue eye boys in gvt parastals.
      Good at producing well writen docs but zero action.

      Gvt have taught all its companies not to pay any for any services, what will make them for a pool of funds for infrastructure.

      Is NetOne paying its taxes?

      Is NetOne paying USF?

      Where is the USF funds? Isnt this the reason why it was created in the first place?

      Wether asset stripping or not, our gvt where ever they get its ministers involved, it turns into dust. Just look whats happening at Hwange Colliery, people are being fired instead of going to jail.

      Econet will be drained to its nees and they will move to the next victim. How many CEOs and board members are being fired in one gvt entity and next day get employed into another!

      You talk like the letter from zte was received by robots with brains.

    2. Also, how many years of delay did Econet suffered due to government withholding license?

      Dindingwe rinonakidzwa richakweva rimwe!!

      1. Maybe u can enlighten me by telling me a few things since u seem to know much. How much have the three operators paid to the Usf in terms of figures and how much has netone paid or not paid. How do u make a conclusion that they do not pay? Secondly how do u justify that Netone does not pay tax when i can see that they actually paid $10 353 327 in taxes. U should understand that if Netone is state owned it means that the real shareholder is u the citizen and not the minister. Even if there is a change in gvt ownership of Netone still remain in u as a citizen coz u pay taxes be it sales or employee tax. May u enlighten me on the questions i asked you since u seem so informed.

        1. Me as the citizen does feel like l own anything, its a cash cow for me more like it and a certain political party.

          If they are failing to settle business transactions, when asked to do so they threaten treason and sabotage, what makes you think they are willingly going to pay USF.

          Im sure Mrs Chasi will do a better than me of exposing the rot of what they ar paying or not even tho we all know no one will go to jail as these entities are good at keeping the Party sweet.

  6. It would be more enlightening to know how much of this revenue they collected. It is one thing to declare a revenue increase when you are providing a free service to Government departments and chefs and quite another to collect that money and actually use it. The other mobile operators realized long ago that it is better not to chase this dead revenue as it makes the books look nice but does not assist actual performance in any way. Indeed if things were so rosy we would be hearing that this operator is paying Zimra, interconnect and other obligations like USF which they are not doing.

  7. juss a look at the cashflow statement- do u reckon it would have been negative cashflows had they paid off interconnection fees to Econet?

  8. Netone & Telone must first pay millions they owe Econet in Interconnect fees before crying for infrastructure sharing. If you’re not faithful in the little you will not be faithful in much

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