TelOne is in trouble. Foreign service providers are threatening the pull the plug if they are not paid their dues. Telecom Capital Finance, a Mauritius based financier has promised to seize TelOne’s shares in the West Indian Ocean Cable Company (WIOCC), not tomorrow, but today. That is if TelOne fails to pay their $1.1 million debt. Funny enough, TelOne also owes WIOCC $6.2 million for internet bandwidth. WIOCC provides capacity to African and international telecommunications companies, over-the-top (OTT) services, content producers and internet service providers. TelOne has escalated its problem to government through the Parliamentary Portfolio committee on ICT.
Who is owed what?
TelOne Managing Director Chipo Mtasa says, “TelOne is in receipt of demand letters from the following service providers: TDM of Mozambique – $5.7 million for backhaul services, Telecom Capital Finance – $1.1 million for loan repayment, Duraline – $845 000 for network material, WIOCC – $6.2 million for internet bandwidth. TelOne continues to be crippled by escalating arrears on a monthly basis with no meaningful allocations received since July 2018…The situation is now out of control.” All in all, TelOne owes 22 companies in Africa, Asia and Europe a total of $22 million.
TelOne is technically insolvent. Its liabilities are more than its assets. However, we must take note that they inherited $380 million in loans from Posts and Telecommunications Corporation (PTC) which was unbundled to form TelOne, Netone and Zimpost in 2000. Government has not been forthcoming with regards to settling those loans. Locally, TelOne owes, Potraz, Zimra, interconnect partners and others. However, TelOne is believed to be owed about $178 million, $98 million of which is owed by government and its state entities. Being a parastatal, TelOne does a lot of business with government or its entities, but unfortunately government seems to also be failing to pay up on time. Plans to privatise TelOne have so far not come to fruition. In any case, it is difficult to find an investor who will be willing to take over the debt-ridden entity.
The consequences are dire
Mrs Mtasa has warned the Parliamentary Portfolio Committee on ICT that failure to pay up has catastrophic consequences. She says TelOne is” …facing threats of service disruptions and foreign litigation.” In her view, this withdrawal of services will lead to a standstill of operations and a huge internet blackout. Many individuals and companies rely on TelOne for their internet. Foreign currency challenges in the country have already led to losses of $7.2 million as at October 2018 mainly due to failure to fulfil customer requirements. It is expected that TelOne may lose a further $20 million due to decreased customer reputation.
Customers left in the cold
If TelOne is cut off, customers will be let down as well. The TelOne Financial Results for 2017 show that the company’s subscriber base grew from 80 745 subscribers in 2016 to 87 851 in 2017, an increase of 8.8%. TelOne’s 3% increase in revenue over the same period is attributable to an upsurge in broadband. Without broadband, TelOne would collapse. The world over, many people are shunning voice traffic. As such, broadband is an integral arm of TelOne’s business model going into the future. Offerings like the newly introduced Digital Entertainment on Demand (DEOD) will suffer a stillbirth. Interestingly, TelOne may face litigation from customers if they fail to meet contractual obligations. Customers may end up deserting TelOne altogether, opting for more reliable service providers like Liquid Telecom or Zol Fibroniks. However, they will have to part with more money as these are relatively more expensive than TelOne.
As I finish off this article, I keep checking if my internet connection has not yet been cut off yet. The situation is so urgent that government needs to act quickly. There is no time for bureaucratic processes as many government departments will also suffer without TelOne. We keep our fingers crossed.