FIXED telecommunications company, TelOne (Pvt) Limited, is hamstrung by a legacy debt amounting to ZWL$335 billion, according to the Auditor-General (AG)’s 2022 report.
The AG said the fixed telecommunications company incurred losses amounting to ZWL$112 billion (2021: ZWL$53.3 billion) in the 2022 financial year.
“The entity has significant legacy loans and borrowings amounting to ZWL$335,05 billion (2021: ZWL$194,2 billion) principal plus interest accruals,” the report read.
“These conditions, along with other matters set out in the financial statements, indicate the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern.”
The AG noted that the company had not been able to secure foreign currency to service foreign loans.
“As a result, finance costs were now more than the capital amount due to non-servicing of the loans. The amounts that were owed as at December 31, 2022 was US$393,8 million (2021: US$413,3 million),” the report reads.
The AG said the company should pursue strategies to service the loans such as pleading with the Finance ministry to facilitate warehousing of legacy loans.
The government auditor also noted that TelOne had not upgraded its internet and communication infrastructure as it was still using copper cables.
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The report notes that as a result, there were significant instances of copper cable vandalism during the year ended December 31, 2022 which affected over 50 000 customers. “Attending these faults on time was putting pressure on the company’s resources,” the AG report read.
The report stated that the company should continue to look for ways to raise funds to expedite migration from copper to modern technologies.
The report indicated that TelOne had an aged fleet of motor vehicles, with some vehicles having been bought as far back as 1992.
As a result, the company is incurring high cost of repairs and maintenance on the vehicles.
“A total of ZWL$3,5 billion (historical ZWL$2,66 billion) was incurred during the year, while ZWL$2,58 billion (historical ZWL$612 million was incurred in 2021, an increase by 37% (335% historical),” the report read.
Indications were that repairs and maintenance costs incurred may exceed the costs of acquiring new vehicles.
The AG recommended that the company considers recapitalising its transport department.
The report also said findings showed that TelOne was not maintaining its properties.
“For instance, houses in Masvingo, Mashava and Mwenezi had non-functional sewage systems, and had roof leaks and cracked walls that were due for repairs. Tenants were resorting to repairing the buildings using their own funds,” the report read.
