High operational costs choke Telecel

TELECOMS outfit, Telecel Zimbabwe has revealed that it is battling “spiralling operational costs”.

Company spokesperson Zitha Dube said the telecommunications firm required urgent capital injection to stay afloat.

Last week, Telecel revealed that it experienced widespread network challenges after its subscribers struggled to access voice calls and data services for several days.

Dube said the crisis had since been resolved, with the company now facing financial challenges.

“We have a strategic plan in place which is awaiting funding from a number of initiatives currently being pursued.

“Like any other company operating in Zimbabwe, the inflationary environment has resulted in spiralling operational costs which are not in tandem with the increase in revenue,” Dube said.

She said the telecommunications sector was capital-intensive and required foreign currency for procurement of equipment for expansion.

“Given these circumstances, we believe that our gearing levels are acceptable.

“The telecom operators are continuously engaging the regulatory authority for viable tariffs,” Dube added.

Telecel is engaging the Chinese multinational tech conglomerate, Huawei Technologies.

However, foreign service providers have in the past threatened to stop servicing local telecommunication firms over non-payment.

The non-payment has been caused by limited foreign currency availability in the country.

Postal and Telecommunications Regulatory Authority (Potraz) data shows that between the first quarter of 2017 and third quarter of 2021, Telecel’s total mobile revenue share has been shrinking.

In terms of mobile revenue itself, the data indicates that Telecel has been losing substantial amounts per quarter.

The loss in revenue is due to a loss of over a million subscribers from 1 646 411 at the end of 2017 to 582 570 as at the end of the third quarter of 2021, according to Potraz.

Potraz director-general Gift Machengete said they were confident of Telecel’s ability to sustain operations provided it got foreign currency.

“We do not believe Telecel will collapse.

“Their operating licence is intact and they have enough subscribers and running services to sustain their operations,” Machengete said.

“Should any mobile network provider decide to stop operations, they are mandated to give ample notice to allow subscribers to move to another network and to also allow subscribers to exhaust their airtime, SMS or data balances,” he said.

Machengete said telecoms firms needed to be prioritised in foreign currency allocation by the Reserve Bank of Zimbabwe. Government has been silent on Telecel’s woes despite being the major shareholder.