Foreign Creditors Threaten Telone With Service Disruption, Appeals To Government To Pay Off Its Debts

It’s only a matter of time till we see Telone’s users having no internet connection, according to Telone’s Managing Director (MD), Mrs. Chipo Mutasa. The state-owned telecoms operator owes as much as $22 million to foreign service providers which it has been failing to pay for some time now.

Now the creditors are now fed up with Telone’s reluctance to service its debt as they have issued four ultimatums threatening to the pull the plug on the state-owned enterprise that will cause a “major internet blackout for the country”. Something which has prompted the MD to beg the government through, the Parliamentary Portfolio Committee on ICT, to bail them out. Here is what Mrs. Mutasa statement said as reported by The Herald

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 the escalating arrears on a monthly basis with no meaningful allocations received since July 2018………We continue to plead for the telecommunications sector to be prioritized for foreign currency allocations and this needs your urgent intervention as the situation is now out of control………Withdrawal of services will result in a standstill of our operations and a major internet blackout for the country…..As reiterated in our past correspondences, Telecom Capital Finance secured a default judgment against TelOne in Mauritius……..The continued delayed remittances will result in seizure of TelOne shares in WIOCC any moment from now (while) Telecom Capital will be reinstating $1,6 million that was written off when refinancing was negotiated in 2014, if TelOne fails to pay the balance of US$1,1 million by December 20, 2018 (today).

It’s not like Telone is not willing to pay it but it just doesn’t have the capacity. Apart from the lack of foreign currency shortages, where the hell does a company which has been making losses since its inception get $22 million from? As it is, Telone is even failing to service local debt.

Whilst Telone may be able to dodge local debtors in delaying payment of its debts, these foreign creditors will deal it a heavy blow firstly, by disconnecting the internet and secondly, by the seizure of the telecoms operator’s shares as one creditor threatens. Telone’s failure to pay its debts (locally and internationally) has already tarnished its reputation which will make it harder and more expensive to borrow in future.

Faced with this, the only way Telone can get out of this mess is through a government’s bailout which Mr.s Mutasa was appealing for. The government can simply just pay off Telone’s foreign debt or lend Telone the money to pay off its debt-and with that it will join a long list of creditors, some who have waited for decades to get their money.

We may moan and groan that government now wants to use our money to pay off debts of a once grossly mismanagement parastatal but it’s needful because the implications of an internet blackout are huge. Telone operates a number of data centers, which many organizations depend on, picture how an internet blackout will affect these companies operations. It will be more or less like a catastrophy (for the lack of a better word) if these foreign creditors pulls the plug on Telone because much of government’s communication is done on Telone’s infrastructure.

Apart from these huge consequences, Telone will most likely lose a huge chunk of its customers in the event of an internet blackout. The state-owned telecoms operator has of late been reinventing itself by offering enticing services like DEOD. It will suffer a huge setback if there is a service disruption, with customers abandoning these kinds of new-yet-to-grow services.