Africom Hit Hard By Cash Crisis, Sinks Even Lower
I know, it is easy to forget that Africom is still active in the Internet Access Provider race. It is easy easy to forget because the company has been struggling and losing ground to competitors. The latest POTRAZ quarterly report shed light on the extent of the struggles the company is facing. From Q1 to Q2 this year the total incoming equipped international internet bandwidth capacity increased by 29.3% and the increase was mainly attributable to Liquid and Telone to a lesser extent.
In that time Africom’s equipped international incoming bandwidth declined by 46.2%, from 465Mbps to 250Mbps. Contrast the paltry 250Mbps with Liquid’s 80000Mbps or even Powertel’s 1860Mbps. Africom went from controlling 0.47% of the equipped international incoming bandwidth to 0.25%. It’s as good as if they are not even competing.
The reason for the dramatic decline was attributed to the foreign currency shortages we are facing in this country. Africom was disconnected by Mobitel, Mozambique for failure to pay bandwidth costs.
It is easy for them to blame the foreign currency shortages because we know how serious those are. The government recently confirmed the extent of the forex shortages we have when they relaxed the import ban on basic goods and calling for individuals and companies with free funds to apply to import basic goods.
The fact remains though that Africom’s problems are much deeper. It’s hard to believe that at one point the company was seen as an innovative alternative to the big guns like Econet.
As the company has continued on its downward spiral there were boardroom squabbles at the company. All this as institutional investors Old Mutual and NSSA threatened to leave.
Major shareholders Fernhaven Investments (Private) Limited sought and won an injuction from the High Court to suspend a resolution passed by its shareholders to reduce its shareholding in Africom.
All these boardroom wars seem to have distracted the executives from their core duties and Africom has suffered for it. The same cash crisis which led to them being disconnected by Mobitel is the same one all the other players are facing. They could have at least maintained their position like Powertel and Dandemutande did but top executives apparently have other priorities.
We will see how the company climbs out of the hole it has sunk into and we really hope they get it together. We need a competitive industry which pushes innovation.–techzim
