Govt debt to TelOne doubles to US$42 million

State-owned telecommunications operator TelOne says unpaid government bills have more than doubled over the past year to almost US$42 million, significantly constraining the company's ability to expand and modernise its network.

The arrears, which increased from US$19.2 million a year ago, underscore the growing financial strain on State-owned enterprises as delayed payments from government continue to erode liquidity and limit investment in critical infrastructure.

According to TelOne's 2025 annual report, the mounting receivables have reduced the company's capacity to finance capital projects, maintain network infrastructure and fund expansion through internally generated resources.

Speaking at the company's annual general meeting last Friday, chief executive officer Lawrence Nkala described the outstanding debt as one of the company's biggest operational challenges.

"We are better than the budget in terms of total operating cost by 2%... As the shareholder spoke to this, in these environments, we are affected in our operations by failure by the government to pay what is due," Nkala said.

"Currently, we do have close to US$42 million that we're owed, ZiG1.2 billion, and it continues to increase. So, we want to be capacitated in that area."

Nkala said the company needed fresh equity investment alongside conventional borrowing to sustain its growth plans.

"We would need not only debt financing, but we also want equity funding. There should be a deliberate attempt to invest rather than relying only on debt financing," he said.

The disclosures add to growing concerns about the Government's increasing reliance on payment arrears to ease pressure on Treasury's cash flows.

While delayed payments provide short-term fiscal relief, analysts say they transfer financial pressures to public enterprises, weakening their balance sheets and limiting their ability to invest in strategic national infrastructure.

Despite the debt burden, TelOne continued to record growth during the year as demand for broadband services increased.

Revenue rose 10% to ZiG2.6 billion, driven largely by a 60% increase in data consumption.

"Revenue for the period under review increased by 10% to ZiG2.6 billion, reflecting steady underlying growth compared to the prior year, anchored by continued network infrastructure investment," the company said.

"Data usage during the period remained the primary growth driver, registering an increase of 60% compared to the same period last year."

TelOne also reported strong growth from its partnership with satellite internet provider Starlink.

Revenue generated through the collaboration surged to US$3.7 million in 2025 from US$215,000 in the previous year.

"The business fully realised value out of its strategic partnership with Starlink, a low-Earth orbit satellite service, recording revenue to the tune of US$3.7 million in 2025, up from US$215,000 in 2024," the company said.

The company's data centre business also continued to expand, providing an additional source of revenue beyond its traditional telecommunications services.

Representing Information Communication Technology, Postal and Courier Services Minister Tatenda Mavetera at the annual general meeting, the ministry's Chief Director, Prince Sibanda, acknowledged that the debt remained a significant obstacle to the company's growth.

"We recognise that debt remains a major constraint on the company's ability to mobilise affordable capital and accelerate modernisation," Sibanda said.

"Government appreciates the efforts being made to pursue sustainable solutions to this inherited burden."

He urged TelOne's board and management to continue strengthening corporate governance, financial management, accountability and operational efficiency as the company seeks to improve its financial position while meeting growing demand for telecommunications services.