State-owned telecommunications company TelOne is reeling under high inflation which has impeded profitability while sub-economic tariffs are threatening to sink the firm.
During the second quarter of 2022, TelOne suffered an 8% slump in earnings before interest, taxes depreciation and amortisation from a high of 35% when the current tariff was affected in September 2021.
“This index has seen a rapid erosion over the past two months, raising viability concerns going forward, in the absence of a tariff review,” TelOne said.
As at end of May 2022, TelOne’s total costs had grown 107% to ZW$1.8 billion per month up from ZW$856 million per month in December 2021.
“While this has been due to the general price increases in the market, the movements in the cost of fuel and power have had a significant impact on the overall cost structure. Diesel price in US dollar terms surged 31% from US$1.34 in September 2021 when our tariff was reviewed to the prevailing price of US$1.76. This, together with the 200% upward power tariff adjustment, have further put the company’s viability status into the negative,” The company’s head of corporate communications, Melody Harry said.
According to Netone, the index has seen a rapid erosion over the past two months, raising viability concerns going forward, in the absence of a tariff review. The parastatal has also been affected by gross vandalism of the copper network, losing US$1.5 million in potential revenue in the period ended 31 December 2021.
Meanwhile, to curb the problem, TelOne says there is a need to replace the copper network with optic fibre and wireless technology, which are less susceptible to vandalism.