Two Zimbabwe telcos are currently in debt and wallowing for a way of surviving
An official report that was focused on State-Owned Enterprises (SOEs) and parastatals was released by the Auditor General. The report states that based on the current situation, there is doubt over the ability of PowerTel Communications (Private) Limited and TelOne to continue operating
Mildred Chiri, Zimbabwe’s Auditor General, has raised concerns about the long-term viability of two government-owned telecommunications companies. These companies’ current liabilities exceed their assets, and they have accumulated losses that amount to millions of dollars over the course of their history.
Zimbabwe Telcos Debt Crisis
As well as being a recognized Internet service provider, PowerTel Communications is a completely owned subsidiary of the electricity utility known as Zimbabwe Electricity Supply Authority Holdings (ZESA).
The Auditor-General made the following statement in reference to TelOne: “The entity has significant legacy loans and borrowings amounting to ZW$46 066 757 523 (2019: ZW41 604 029 523) principal plus interest accruals. The fixed-term borrowings approached maturity without realistic prospects of renewal or repayment. The conditions indicate that material exists that may cast significant doubt about the company’s ability to continue as a going concern.”
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This debt amounted to US$18 586 005 as of December 31, 2020, according to the study, and 75% of this obligation was overdue by more than 120 days as of that date.
Furthermore, report shows that ”upon inquiry with the management of the state-owned entity, it was noted that the inability to settle outstanding international debt was primarily caused by a lack of access to foreign currency.”
Challenges in Zimbabwe Telecommunication Sector
Persistence Gwanyanya, a local economist, stated that the country’s telecommunications industry is in dire need of foreign currency in order to acquire equipment and infrastructure. This condition has a severe influence on the state-owned telcos.
Gwanyanya stated that industry participants will be supported by the window of opportunity granted by the regulator to allow the telecommunication providers to charge for their services in a foreign currency.