TelOne recorded a 147% inflation adjusted increase in revenue as a result of an upsurge in demand in broad band services, the board Chairman Douglas Zimbango, said in his annual general meeting report.
TelOne held its 7th successive Annual General Meeting where its Audited Financial Results shows an increase in revenue despite the slowdown in the economy due to the COVID-19 pandemic.
In his report Zimbango said: “the company managed to post an inflation adjusted operating profit of ZW$523million from ZW$449million in the previous year, building on the strong performance recorded in the inaugural year of the Telecommunication Media and Technology (TMT) strategy in 2019.”
Zimbango also said: “Influenced by our client centric approach, TelOne achieved an improved customer satisfaction index of 79% in 2020 as compared to 73.2% in 2019. We remain committed to enhance customer experience through new services, improved customer support and efficient customer complaints resolution.”
“The upsurge in demand for Home Broadband services was driven by the COVID-19 induced remote working model(tele-working) adopted by many corporates, accompanied by an increase in online shopping and e-learning,” he said.
The increase in inflation adjusted revenue comes at a time when TelOne is burdened by foreign legacy loans amounting to ZW$34,7 billion.
“The foreign legacy loans expenses amounting to ZW$34,7 billion emanating from the legacy debt of ZW$35.9 billion (US$432million), continued burdening the company despite persistent efforts for the government to warehouse the debt,” he said.
In 2019 government announced plans to warehouse TelOne legacy loans inorder to restructure the company balance sheet and pave way for privatisation.
However, according to Zimbango: “the formalities of the legacy loan restructuring had not yet been finalized at the end of the year to allow the company to derecognise these loans.”
In his report Zimbango also said TelOne achieved a 2% increase in Earnings Before Interest Depreciation and Tax (EBITDA) from ZW$658 million in 2019 to ZW$671 million in 2020.
“The improved performance was driven by revenue growth and cost containment initiatives. Operating expenses increased by 220% from $1billion in 2019 to $3.2billion in 2020. The increase in operating expenses was mainly driven by the depreciation in the exchange rate of 381% which exceeded inflation of 348%.
“Operating costs for the ICT sector are largely foreign currency driven as most of the equipment and software are imported. The depreciation in the rates of exchange therefore has a bearing on the company’s operating expenses.”
The inflation adjusted increase in revenue also comes at a time when TelOne is owed ZW$1.7billion by its suppliers.
“The Government of Zimbabwe owes ZW$575 million while Parastatals and State Owned Enterprises accounted for ZW$105 million.
“The government has 22% (ZW$119 million) of its debt outstanding for more than 6 months, thereby constraining the company’s cash flows and liquidity position. As means to mitigate the problem, the company has made an appeal to the Ministry of Information Communication Technology, Postal and Courier Services and Ministry of Finance & Economic Development to facilitate the company’s initiatives to ease the debt. A number of Government ministries have now been migrated to prepaid services,” Zimbango said.