State-owned telecommunications firm TelOne today held its Annual General Meeting where the company presented some impressive figures for 2020. The highlight of the report was the revenue generated increasing by 147% in 2020 to record (inflation-adjusted) ZWL$4.7 billion from the ZWL$1.9 billion that was registered in 2019. TelOne also saw a 14% growth in subscribers while usage also increased by 22%.
TelOne says that the record revenue growth was due in large part to the demand for broadband services that were brought about by the pandemic. On the profit front, TelOne also did pretty well recording an inflation-adjusted operating profit of ZWL$532 million. This is considering 2020 was not an easy year for most businesses and individuals because of the lockdowns that heavily depressed incomes across the board.
Operating expenses, unsurprisingly, rose and significantly
Mirroring the rise in revenue, operating costs were also on the up in 2020 for TelOne. Operating expenses grew by 220% in 2020 from ZWL$1 Billion to ZWL$3.2 billion (inflation-adjusted). The chief reason for this was the depreciation of the local currency and the hyperinflationary nature of the economy.
Telecoms companies and mobile network operators need to source software, equipment and other services from abroad. Those services need to be paid in forex and with the local currency weakening in relation to other currencies, exchange rate losses will, for some time to come, reflect on those companies operating expenses.
On the other hand, TelOne’s Earnings Before Interest Depreciation and Tax (EBITDA) appreciated by 2% in 2020 from ZWL$658 million to ZWL$671 million in 2020. TelOne says the EBITDA increased because the company has been fastidiously managing expenditure.
Legacy loans
TelOne is carrying legacy loan expenses amounting to ZWL$34.7 billion (originally ZWL$35.9 billion) stemming from the unbundling of the Posts and Telecommunications Corporation of Zimbabwe. The government had made plans in 2019 to settle the matter to pave the way for privatisation but as I am sure you are all aware that has happened yet.
“During the period under review, the company’s Net Loss Before Tax of ZW$10.3 billion compared to loss Before Tax of ZW$35 billion in 2019, is attributable mainly to the legacy loans expenses amounting to ZW$34.7 billion being partially offset by a monetary gain achieved of ZW$24.7 billion. If legacy loan expenses are excluded, the company achieves a profit before tax of ZW$24,4 billion (2019: ZW$508 million)”
TelOne AGM Statement
On the other side of things, TelOne is owed ZWL$575 million by the Government of Zimbabwe while its parastatals owe ZWL$105 million. That amount is 22% of what is owed (ZWL$1.7 billion) to the company and TelOne has appealed to the Ministry of ICTs and the Ministry of Finance to facilitate TelOne’s initiatives to ease debt.
A measure that has already been implemented by the govt is switching some of its ministries to pay-as-you-go or prepaid plans.
Network improvements
For the period under review, TelOne undertook Network upgrades that amounted to ZWL$151 million. The key investments that were made in 2020 are:
- Data centre facilities upgrade at a cost of US$1,7million.
- FTTH (Fibre-to-the-Home) deployment in Mabvazuva with a capacity of 1,800 homes at a cost of US$282K.
- Upgrade of Kariba-Harare-Masvingo-Beitbridge backbone link from 100G to 300G. This was completed in March 2021 at a cost of US$578K.
TelOne’s progress in improving its network infrastructure has been hampered by Vandals. The company said that it will continue to be mindful of network vandalism and it work is underway to replace copper in its network with fibre.
“We remain confident of our ability to deliver our vision through the dynamic strategies that are coming through as well as the support of the shareholder, as has become custom”
Dr. Douglas Zimbango, TelOne Board Chairman
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