News / National
TelOne struggles to attract investment
03 Jul 2025 at 12:29hrs | Views
TelOne (Private) Limited is facing significant challenges in securing fresh capital for vital infrastructure expansion projects, as legacy debts inherited from the defunct Posts and Telecommunications Corporation (PTC) continue to weigh heavily on the company's balance sheet and scare off potential investors.
The state-owned telecom firm remains burdened with legacy loans totaling ZWG10.05 billion (approximately US$389 million), resulting in a net liability position of ZWG32.2 billion as of December 31, 2024, according to figures revealed at TelOne's 11th Annual General Meeting (AGM) this week.
Chief Executive Officer Engineer Lawrence Nkala cautioned stakeholders that without urgent restructuring of the balance sheet, the company's ability to attract investment and deliver on its network modernization and digitalization ambitions will remain severely constrained.
"TelOne inherited loans worth ZWG10.05 billion from PTC. This legacy debt continues to encumber our balance sheet and has left us operating in a net liability position of ZWG32.2 billion as at December 31, 2024," Nkala said. "This financial position has hindered our efforts to attract fresh capital for essential network modernization projects."
In an effort to resolve this, TelOne-through its shareholder Mutapa Investment Fund-is pursuing a debt warehousing arrangement intended to free up its balance sheet and make the company more attractive to investors.
Nkala also highlighted persistent liquidity challenges over the year, which increased counterparty risks and constrained working capital, limiting the company's capacity to fund capital expenditures.
Compounding TelOne's financial woes is the growing debt owed to it by the Government of Zimbabwe, one of its largest clients. Government arrears to TelOne surged to ZWG325.3 billion by the end of 2024, up from ZWG128.8 billion (restated) at the end of 2023.
"As at the AGM date, the Government owed TelOne ZWG517.2 billion (equivalent to US$19.2 million)," Nkala disclosed. "We continue to engage government to settle its debts through various agreed payment options."
Government representatives attending the AGM acknowledged the delays and committed to clearing a substantial portion of the outstanding amount by June 30, 2026.
Despite these challenges, TelOne posted inflation-adjusted revenue of ZWG2 billion for 2024, marking a 20% increase from the previous year. Growth was driven by organic expansion across wholesale, enterprise, data center and cloud solutions, and home broadband services.
The wholesale segment achieved sales of 81.8Gb, a 102% increase, while enterprise grew 26% to 25.87Gb. Data center and cloud solutions demand rose 23%, and home broadband subscribers increased 5% to 147,876, with an average revenue per user of US$12 monthly.
However, rising inflation and escalating infrastructure repair costs-including expenses from widespread network vandalism and depreciation following an interim asset revaluation-weighed down profitability. Operating expenses jumped to ZWG1.4 billion in 2024 from ZWG986 million in 2023.
"The cost increase is largely attributable to network repairs from vandalism and depreciation from revaluation exercises," Nkala explained.
Nevertheless, TelOne recorded Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of ZWG416 million.
Using internally generated funds, TelOne invested in several key projects, including commissioning 29 new LTE base stations, connecting 12,000 homes via Fibre-to-the-Home (FTTH), completing a 305sqm Omni Contact Centre with 102 seats, implementing Security-as-a-Service (SECaaS), and upgrading core digital platforms.
Internet bandwidth capacity expanded from 165Gb in 2023 to 195Gb in 2024 to support growth and improve client experience. Network availability remained strong with uptimes of 98.41% on the backbone and 99.99% on the core network.
However, voice minutes declined 13% to 244 million, reflecting shifts to over-the-top (OTT) voice services and the negative impact of rampant network vandalism.
Infrastructure vandalism remains a major concern. Nkala reported 482 incidents in 2024 that affected over 61,600 clients, with restoration costs estimated at US$766,119 and revenue losses at US$589,634.
"Vandalism has severely impacted our ability to deliver quality services," Nkala said. "Over 60% of our infrastructure has been targeted."
Looking forward, TelOne plans to accelerate LTE and FTTH rollouts to meet growing telecommunications demand and improve customer satisfaction.
Management is also focusing on improving collections through enhanced debt recovery to boost liquidity and fund network expansions. However, Nkala emphasized that resolving legacy debts is critical.
"Freeing up the balance sheet is essential to restore investor confidence and unlock capital for modernization," he said.
The success of these initiatives will depend largely on government settling its debts and the effective execution of the debt warehousing strategy. Until then, TelOne's aspirations for growth and digital transformation remain constrained by inherited financial burdens.
The state-owned telecom firm remains burdened with legacy loans totaling ZWG10.05 billion (approximately US$389 million), resulting in a net liability position of ZWG32.2 billion as of December 31, 2024, according to figures revealed at TelOne's 11th Annual General Meeting (AGM) this week.
Chief Executive Officer Engineer Lawrence Nkala cautioned stakeholders that without urgent restructuring of the balance sheet, the company's ability to attract investment and deliver on its network modernization and digitalization ambitions will remain severely constrained.
"TelOne inherited loans worth ZWG10.05 billion from PTC. This legacy debt continues to encumber our balance sheet and has left us operating in a net liability position of ZWG32.2 billion as at December 31, 2024," Nkala said. "This financial position has hindered our efforts to attract fresh capital for essential network modernization projects."
In an effort to resolve this, TelOne-through its shareholder Mutapa Investment Fund-is pursuing a debt warehousing arrangement intended to free up its balance sheet and make the company more attractive to investors.
Nkala also highlighted persistent liquidity challenges over the year, which increased counterparty risks and constrained working capital, limiting the company's capacity to fund capital expenditures.
Compounding TelOne's financial woes is the growing debt owed to it by the Government of Zimbabwe, one of its largest clients. Government arrears to TelOne surged to ZWG325.3 billion by the end of 2024, up from ZWG128.8 billion (restated) at the end of 2023.
"As at the AGM date, the Government owed TelOne ZWG517.2 billion (equivalent to US$19.2 million)," Nkala disclosed. "We continue to engage government to settle its debts through various agreed payment options."
Government representatives attending the AGM acknowledged the delays and committed to clearing a substantial portion of the outstanding amount by June 30, 2026.
Despite these challenges, TelOne posted inflation-adjusted revenue of ZWG2 billion for 2024, marking a 20% increase from the previous year. Growth was driven by organic expansion across wholesale, enterprise, data center and cloud solutions, and home broadband services.
The wholesale segment achieved sales of 81.8Gb, a 102% increase, while enterprise grew 26% to 25.87Gb. Data center and cloud solutions demand rose 23%, and home broadband subscribers increased 5% to 147,876, with an average revenue per user of US$12 monthly.
"The cost increase is largely attributable to network repairs from vandalism and depreciation from revaluation exercises," Nkala explained.
Nevertheless, TelOne recorded Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of ZWG416 million.
Using internally generated funds, TelOne invested in several key projects, including commissioning 29 new LTE base stations, connecting 12,000 homes via Fibre-to-the-Home (FTTH), completing a 305sqm Omni Contact Centre with 102 seats, implementing Security-as-a-Service (SECaaS), and upgrading core digital platforms.
Internet bandwidth capacity expanded from 165Gb in 2023 to 195Gb in 2024 to support growth and improve client experience. Network availability remained strong with uptimes of 98.41% on the backbone and 99.99% on the core network.
However, voice minutes declined 13% to 244 million, reflecting shifts to over-the-top (OTT) voice services and the negative impact of rampant network vandalism.
Infrastructure vandalism remains a major concern. Nkala reported 482 incidents in 2024 that affected over 61,600 clients, with restoration costs estimated at US$766,119 and revenue losses at US$589,634.
"Vandalism has severely impacted our ability to deliver quality services," Nkala said. "Over 60% of our infrastructure has been targeted."
Looking forward, TelOne plans to accelerate LTE and FTTH rollouts to meet growing telecommunications demand and improve customer satisfaction.
Management is also focusing on improving collections through enhanced debt recovery to boost liquidity and fund network expansions. However, Nkala emphasized that resolving legacy debts is critical.
"Freeing up the balance sheet is essential to restore investor confidence and unlock capital for modernization," he said.
The success of these initiatives will depend largely on government settling its debts and the effective execution of the debt warehousing strategy. Until then, TelOne's aspirations for growth and digital transformation remain constrained by inherited financial burdens.
Source - Business Times
