By Jonathan Mbiriyamveka
Telecomms giant — TelOne — is faced with a severe crisis that is threatening its viability due to prevailing economic crisis that is biting the country and pushing several companies out of business.
According to the company’s Annual General Meeting (AGM) report presented Thursday, TelOne has been affected by the hyper-inflationary environment and also by the unpredictable foreign exchange rates therefore securing critical equipment at a loss.
“The Company is faced with acute viability challenges due to the prevailing hyper-inflation against a tightly controlled tariff.
“The cost of importation and distribution of 1 Mbps is US$28, however, TelOne is unsustainably distributing the same unit at US$10 as the Company has been unable to get a tariff review,” the report said.
The last tariff review was in September 2021. When measured against the movements in exchange rates, for voice products the effective price was US$0.07cents per minute after the tariff increase and it deteriorated by 19.3% to US$0.058 cents per minute by 31 December 2021.
“As at the date of publishing of this report, no tariff adjustments had been approved for 2022.
“Consequently, the effective price for voice and broadband has fallen to an unsustainable US$0.025cents per minute and US$0.00050 cents per megabyte, respectively, as of 31 May 2022,” the report said.
Meanwhile, the Company’s total costs have ballooned by 107% to ZWL1.8 billion per month up from ZWL856 million per month.
While this has been due to the general price increases in the market, the movements in the cost of fuel and power have had significant impact on the overall cost structure.
Diesel price in US$ terms surged 31% from US$1.34 in September 2021 when our tariff was reviewed to the prevailing price of US$1.76. This together with the 200% upward power tariff adjustment have further put the Company’s viability status into the negative.
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