Tough targets for NetOne

EXECUTIVES at the State-run mobile telecoms network, NetOne, came under pressure to perform last week, with the government setting tough growth targets to be achieved by the end of 2021.

Information Communication Technology (ICT) minister Jenfan Muswere demanded the implementation of strategies towards clearing a US$286 million debt owed to Chinese lender China Exim Bank, as he directed the firm to collect up to ZW$2,3 billion (about US$26,8 million) in outstanding debts owed by clients including the Government of Zimbabwe, by the end of October.

He said while Zimbabwe's second largest mobile telecoms network had achieved significant progress towards chipping off EcoCash's share of the mobile money transfer market, the battle to make fresh market inroads must be scaled up to leave OneMoney with a 40% market share by year end.

OneMoney is NetOne's mobile money transfer unit, while EcoCash was established by Zimbabwe's largest mobile telecoms firm, Econet Wireless, before being unbundled to operate independently.

But for NetOne executives, the defining moment of Muswere's short speech delivered during a virtual 2021 annual general meeting (AGM) last week, should have been his intention to roll out performance based contracts as the business implements full scale commercialisation.

Muswere's list of demands could be tough for an executive that has operated without a substantive chief executive officer (CEO) for a long time.

But these could be signs of another looming revamp of the NetOne executive as the government gears up to frustrate the Zimbabwe Stock Exchange-listed Econet Wireless' ambition to continue dominating the mobile telecoms space.

"I applaud NetOne for its determination to attain the majority of the market share and improve on the growth rate of yesteryear," Muswere said in his address to the AGM.

He said the firm must achieve the milestone within the next financial year.

"NetOne needs to develop 10 more data centric product lines and to achieve a 40% national telecoms revenue share. We look forward to seeing more participation in the mobile financial services sector anchored on the fact that your shareholder, the government, controls the greater amount of financial flows in the economy. We expect more and more dividends from NetOne. The great movement witnessed in the OneMoney service over the year gaining a market share of 8% from 6,4% to 14,4% is worth noting. This can nevertheless be expanded significantly to occupy a leading position in the market. We expect OneMoney to have a 40% national revenue share before year end," he said.

The minister said NetOne must fully implement its commercialisation strategy and adopt the "no pay no service" policy. However, working to the NetOne executive's advantage is its demonstrable capacity to enhance shareholder value under an extremely volatile environment that has been compounded by the government's demand that operators maintain Zimbabwe dollar tariffs in a re-dollarised terrain. Zimbabwe's oldest mobile network pushed 2020 revenues up 35% to $5,89 billion (about US$68 million) from $4,36 billion (about US$50 million) during the previous comparable period, wading off Covid-19 inspired hard lockdowns' threats to business.

Operating profit charged 39% to $1,99 billion (about US$23 million in 2020, compared to $1,44 billion (about US$16 million) in 2019. The firm added about 500 000 new subscribers to its network during the review period, reaching the 3,69 million marker from 3,17 million in 2019, according to Postal and Telecommunications Regulatory Authority data.

This represented a four percentage point market share growth to 28%.

Still, NetOne trailed behind the Econet subscriber base.

"NetOne is a business entity and performance is of paramount importance. Management is encouraged to be more innovative and create new revenue streams to generate foreign currency so that repayments are made on time towards the China Exim loans totaling US$286 million," Muswere said.