NetOne, Zimbabwe’s second-largest mobile network operator, and a state-owned enterprise needs $600 million to complete its network expansion exercise.
According to the Financial Gazette, Reward Kangai, the CEO of NetOne shared this information in an interview where he also outlined some of the growth targets for the telecoms operator.
NetOne has a revenue target of $150 million set for 2016, a projection that has likely been influenced by its growth in subscriber numbers as well as the network expansion that it has been carrying out for over year courtesy of a $218 million loan from the Chinese government.
This capital injection was directed towards a series of network service upgrades which included the setup of NetOne’s extensive LTE network as well as the installation of 148 base stations through the National Mobile Broadband Project.
The $600 million boost that’s required is supposed to provide NetOne with enough resources to continue this network rollout. The figure sounds very ambitious considering how NetOne had to go through extensive procedures to secure the $218 million.
It also seems like a bit of long shot, especially when taken it the context of NetOne no longer being the only mobile network operator under State control. Last year the government secured a controlling stake in the country’s smallest operator by subscriber numbers, Telecel.
As such, any investment in state-owned telecoms would have to consider the returns that NetOne can offer against similar investments being plowed into not just Telecel, but TelOne, another telecoms parastatal that has managed to buck the trend over the past few years and turn itself into a profitable concern with a new focus.
Hopes lie in the return to profitability?
Kangai has stated that between January and November 2015, NetOne recorded $121 million in revenue, which was a notable increase from the $110 million in total revenue recorded in 2014. During the same period, NetOne’s net profit was moored somewhere between $2 million and $3 million.
It’s a feeble number for an operator with 3,8 million active users (twice as many as its competitor Telecel) and the only subscriber base that is consistently growing.
However, it does show a claw back from a $5,8 million loss recorded in the first half of 2015. Based on these preliminary figures, NetOne is looking at brighter days ahead particularly if it can work on the slew of services that it hasn’t aggressively pushed to the market like mobile money.
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7 comments
I sincerely hope they will pay their licence fees either from the loan or revenue. To me it sounds absurd and unfair that only Econet was cajoled into paying licence fees. Why does Government not cancel the licences for TelOne, NetOne and Telecel.
I sense someone in Government is trying to pull Econet down. Maybe they want to be given free shares in Econet.
NetOne licence expires next year. Maybe you can ask that question when it defaults on payment next year
$121 000 000 in revenues only to record $3 million in profit!
It’s like for every $1 airtime sold, $0.025 is the profit and $0.975 goes to Salaries and other operating expenses EXCLUDING CAPITAL EXPENSE!
For a telco industry company THIS IS CRIMINAL!
Vanhu vanoita zvekutamba neUS dollar haikona. 600million USD just for completion of an expansion?
Does he mean $600 million ZimDollars or US dollars?
Econet borrowed $300 million on open markets and managed to build a network which was not only able to return profits, but it was able to pay back the loan installments, pay for its license and still able to venture into other business roads.
Netone was given a soft loan, there is nothing to show for it and is now asking for triple the amount to finish the same job. What if they get borrowed that 600mil, next he will be asking $1,8billion to finish off the project again!
Where is Mandiwanzira on this? We were being asked to believe that gvt taking over telecel and joining it into one big happy family will end all this money wasting infrastructure building.
Why cannot Kangai share the infrastructure with his other buddies?
Netone possibility funds a lot of dark operations for the government. The subscriber numbers are also possibility understated for financial manipulation. Netone is now very close to econet in terms of subscribers. That may be the sad story of netone, state interference.
I do not understand why Kangai keeps requesting for more money while at the same time not justifying the profits realised from some capital already given to it. Its clear that something very sinister is happening. Kangai mentions 3.6 million subscribers, Potraz’s third quarter 2015 report mentions 3.8million active subscribers and I am sure now Netone’s number now exceeds 4million. its like there is clear manipulation of figures there. Multiply Netone’s average revenue of $3.60 by 4million then multiply by 12 months u will see how much Netone is supposed to get yet u get silly figures regarding its revenue. Its revenues should be able to reach about $500million per year given the number of subscribers currently using data services on its network. where is the other money going? we await to see if netone pays the licence fees in 2017 as well as the usf fees.