Timothy
Golden Sibanda
Government is committed to restructure fixed telecommunications company TelOne’s $34.7 billion (US$432 million) legacy debt by year end to improve the firm’s performance, a Cabinet minister has revealed.
Minister of Information Communication Technology, Postal and Courier Services Dr Jenfan Muswere, told TelOne’s annual general meeting (AGM) last week he was confident the Government will resolve the issue by year end.
He said his ministry was keen on cleaning up the company’s balance sheet by warehousing the foreign legacy loans amounting to US$432 million in line with resolutions passed by the Cabinet in March 2019.
The ICT minister said while the State owned telecoms firm’s performance in 2020 bettered its outturn for the prior year, he noted the negative impact the legacy loans had on its performance.
TelOne blamed the net loss before tax of $10,3 billion in 2020, from loss before tax loss of $35 billion in 2019, on the impact of the legacy loan expenses, which has also delayed planned privatisation.
“The impact of the PTC (Post and Telecommunications Company) legacy loans on the company’s performance has been noted, and indeed the $34,7billion legacy loan expenses have overshadowed the positive performance achieved at operating profit level.
“It is encouraging to note that the Ministry of Finance and Economic Development has already expressed willingness by the Shareholder to warehouse TelOne’s legacy debt,” Muswere said.
He said that he was “very confident the Government will resolve this issue by the end of the 2021 financial year,” adding with a stronger balance sheet, TelOne should be able to finally declare a dividend.
The foreign legacy loans expenses emanating from the US$432million foreign legacy debt have continued to burden the company and TelOne said it wanted the Government to warehouse the debt.
“The Government announced plans to warehouse TelOne legacy loans in April 2019 amounting to $35.9 billion (US$432 million), which were inherited from the Posts and Telecommunications Corporation of Zimbabwe at its unbundling,” TelOne said.
Warehousing of the legacy loans is meant to allow restructuring of the company’s balance sheet and pave way for privatisation, but this was not completed in 2020 to enable the company to derecognise the loans.
The company posted operating profit of $523 million, a notable improvement from the operating profit of $449million which the company achieved in the same period in 2019.
It saw a 2 percent increase in earnings before interest, tax and depreciation and amortisation from $658 million to $671 million in 2020, driven by revenue growth and cost containment.
The ICT minister commended the company’s performance last year, further noting that this was achieved after the company contained staff cost to income ratio within the stipulated threshold of 30 percent.
At its 7th successive AGM, TelOne said inflation adjusted revenue grew by 147 percent to $4,7 billion in 2020 mainly propelled by an upsurge in demand in broadband services.
Revenue growth was driven by a 14 percent increase in home broadband subscribers to 128 545. The trend has gained momentum with the broadband subscribers now at 129 590.
“This development is key in that it resonates with the drive by the Government to increase access and utilisation of broadband especially as a key driver for economic development,” Minister Muswere said.
While the telecoms company’s voice utilisation in terms of minutes declined by 19 percent, the ICTs minister bemoaned the fact that there had been a 4 percent decline in the voice subscribers.
Minister Muswere commended TelOne the company for generating its own foreign currency, although the earnings were still inadequate to cover its forex denominated bills.
Bongani Ndlovu