Treasury, through Government Ministries, owes NetOne more than US $6 million… Effectively, NetOne is subsidizing defaulting customers, whilst NetOne management is being cast in bad light in Parliament and in the media. A number of parliamentarians and Senators owe NetOne since 2009 and had not paid up to now.
These were the words of NetOne Managing Director, Reward Kangai in an interview carried out with the local state owned weekly newspaper The Sunday Mail recently. According to Kangai, NetOne, itself a state owned mobile operator, is owed some US $30 million in debts an amount whose provision in their financials constituted much of the loss the company has made.
NetOne was said to be technically insolvent by its auditors after it posted a $14.4 million loss in the in the full year to December 2010. The mobile operator is also failing to pay annual license and spectrum fees to the telecoms regulator, Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ).
Another contributor to the loss the company made is the expensive money it borrowed to finance operations. According to Kangai, NetOne is unable to borrow from its traditional sources and had to find other sources where it got interests rates as high as 30% per annum. NetOne owes large amounts of money to its original funders when it set up the network back in 1996. These include a German government owned development bank called KFW (same one financing Econet), Standard Chartered Bank UK, and ING Bank of Tokyo.
Some legacy debts it took over when the government disbanded the Post and Telecommunications Corporation (PTC) into; TelOne, a fixed telecoms company trying to make a comeback via broadband internet); Zimpost, a postal services company whose relevance is waning, and NetOne. “There were huge debts,” said Kangai in the interview, “We had to find a way of distributing the liabilities of the former company.”
NetOne,is currently the country smallest mobile operator by number of subscribers, with just over 1.6 million active subscribers. Its competitors, Telecel and Econet, have 2 million and 6.4 million subscribers respectively. NetOne recently signed a telecoms equipment deal for 2,000 base stations worth US $200 million with major Chinese telecommunications equipment and services company Huawei Technologies.