Despite its loss-making position, fixed telecommunications firm TelOne will not weigh down on mobile telecommunications operator NetOne’s profitability as a merger between the two firms nears.
Both entities are State-owned, and the anticipated merger is part of Government’s broader strategy to privatise the companies.
For 2018, NetOne recorded a US$10,2 million profit, a massive turnaround from a US$77 million loss position previously, as revenue for the period grew 13 percent to US$119,1 million from US$105,5 million.
On the other hand, although TelOne’s revenues increased from $119 million in 2017 to $125 million last year, the company remained in a loss-making position attributable to finance charges on legacy loans of $12,4 million. The fixed telecommunications operator also suffered a $8,9 million penalty by the Zimbabwe Revenue Authority (Zimra) for late settlement of its tax obligations.
Said NetOne chief executive Lazarus Muchenje:
“They (TelOne) has dramatically reduced their losses, just in the past year they reduced their losses by almost 50 percent, which is very commendable. So they are on a very positive trajectory.”
Muchenje added that fixed-mobile convergence is the future of telecommunications.
Fixed-mobile convergence (FMC) is an increasing trend towards seamless connectivity between fixed and wireless telecommunications networks.
FMC has also been used to describe any physical network that allows cellular telephone sets to function smoothly with the fixed network infrastructure.
“At this stage the shareholder feels that potential buyers could find more attractive a combination of fixed network and mobile network.
“There is wisdom in that because it talks to the issue of fixed and mobile convergence, which is where we are going in the future. Very soon there will be no difference between the two,” said Muchenje.
“Are they holding us back? Certainly not. I think they are already ahead in the privatisation game, and we are actually catching up.”
Government has indicated plans to merge the two entities, while retaining a 40 percent stake.
Earlier this year Finance and Economic Development Minister Mthuli Ncube said cabinet said an evaluation process was underway to determine the actual current value of the firms’ assets.