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Mobile cellular operator NetOne was making as little as 2,8 cents from voice calls per minute while its competitors earned a whopping 12 cents per minute because of a poor business model used by the parasatatal’s suspended management, Parliamentarians heard yesterday. For that reason, NetOne posted a loss of about $3 million when it earned about $120 million last year compared to its biggest competitor, Econet Wireless that was making more than $700 million per year.
NetOne ran a dollar per day promotion that saw its subscribers having unlimited calls offer for on-net calls made during off-peak hours since 2012.
This was revealed during a tour of NetOne by the Parliamentary Portfolio Committee on Youth, Indigenisation and Economic Empowerment chaired by Zanu-PF MP for Gokwe-Nembudziya, Cde Justice Mayor Wadyajena, in Harare yesterday.
NetOne acting chief executive officer Brian Mutandiro told the committee that the firm’s infrastructure was about 50 percent that of Econet, so all things being equal, the mobile operator should be making at least $350 million per year.
He said the previous management also concentrated on rolling out infrastructure in various parts of the country without offering other services such as airtime in some areas.
Network operators largely make profit from airtime sales.
“As at the end of 2015, there was a loss in NetOne of about $3 million,” said Mutandiro, who joined the firm in March this year.
“For us it’s a crime because our competitor Econet is making a lot of money. So there’s no reason why NetOne can’t make money because we’re all eating from the same pot. In 2014, half-a-billion dollars was spent on airtime, so there’s money. So it’s up to NetOne to aggressively pursue that,” he said.
“Currently our turnover is around $120 million per year but the infrastructure that we’ve is about 50 percent that of Econet and Econet is turning over about $700 million per year, which means somewhere there’s something we’re not doing. That’s where we’re focusing right now.”
Mutandiro said they had adopted a number of strategies that were expected to improve revenue inflows and see the firm declaring a dividend to government this year.
MPs asked why the company was making losses while its competitors were making profit.
“Like I shared with you that in 2015 we made a loss of $3 million. We’re saying we rolled out a network but we didn’t follow up to create revenue streams to sit on that network,” he responded. “I will give you an example where at times a base station is put in an area but there will be no airtime. So you’re not monetising the investment. But our focus is very specific that we must operate profitably.
“They (previous management) were quite happy to say we’ve the widest network in the rural areas but what they were not saying is that ‘are we collecting revenue from there?’ So the focus that my team has is to go back to fulfil that demand so that the money comes back,” he said.
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