Powertel returns to profitability

07 Jun, 2019 - 00:06 0 Views
Powertel returns to profitability The Powertel shop

eBusiness Weekly

Enacy Mapakame 
Internet service provider (ISP), Powertel returned to profitability last year, recovering from a loss of US$3 million in 2017 to post marginal profit of US$263 000, despite a challenging operating environment.

Revenue for the year rose 3 percent to US$25,8 million compared to US$25,1 million recorded in the comparable year.

Powertel indicated that the challenging operating environment characterised by foreign currency shortages and liquidity challenges had a knock-on effect on the business.

Subscriber growth also remained low due to the tough economic conditions although the business continued to provide value for money services to meet clients’ requirements.

Demand for low tariffs by customers persisted in 2018, further impacting negatively on the group’s bottom line. Tariffs remained largely market driven although market pressures to lower them continued during the year under review.

The telecommunications sector however recorded significant internet usage reflecting the global trend of the modern day society’s dependency on information communication technology.

According to POTRAZ’s 2018 fourth quarter report, active internet subscriptions grew by 13,4 percent to 8,7 million from 7,7 million recorded in the previous quarter while the internet penetration rate reached 62,9 percent from 55,4 percent recorded in the previous quarter.

The business recorded an 8,7 percent increase in income to US$27,86 million while earnings before interest tax, depreciation and amortisation (EBITDA) surged 183 percent to US$3 million.

Percent EBITDA as a percentage of income increased to 10,8 percent from 41 percent in the previous year.

Total assets went down 5 percent to US$56 million from prior year’s US$59 million on the back of lack of investment in property, plant and equipment as well as depreciation.

Unavailability of funding for capital projects remained the main constraint for the business and it impacted negatively on network expansion and revenue growth.

Managing director, Engineer Samuel Maminimini said despite the funding challenges, the business continued to effectively deliver on its mandate of supporting power generation transmission and distribution as well as defend its market share.

“The business continued with the strategy of defending market share by employing sustained service quality delivery. Focused resource allocation and innovative solution development were being used to ensure sustained revenue streams and business growth,” Mr Maminimini said in the company’s annual report for 2018.

During the period under review, Powertel invested in various projects to increase network capacity and coverage as well as opening up new markets, for instance Chegutu, which came through the group’s distribution and access optic fibre network.

The business also increased its physical distribution channels for prepaid electricity token sales by 6,7 percent.

In 2018, on average 95,3 percent of all pre-paid electricity transactions were being handled by the business’s electricity vending platform up from 94,4 percent.

On average, 84,9 percent of Zesa’s prepaid electricity revenue was collected through the Powertel e-vending system in 2018 up from 84,4 percent recorded in 2017.

In the outlook, Powertel said it remained upbeat that proper implementation of economic reforms and the Transitional Stabilisation Programme (TSP) will usher in better economic conditions that should see businesses booming across segments.

However, within the telecommunications sector, massive competition is expected to remain high in 2019 while the trend on slow subscriber growth is also expected to remain.

“Competition is forecast to be mainly on pricing and service packaging as operators focus on customer retention and reduction of customer churn,” Maninimini said

In line with this, he said, customer retention remains one of the key focus areas for Powertel, as well as improving revenue streams and infrastructure deployment.

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