Legacy debt choking NetOne
STATE-owned mobile network operator, NetOne says legacy debts continue to negatively impact on the company’s balance sheet, and is pushing for timeous clearance of the debts to avoid further repercussions.
According to NetOne total foreign debt now stands at US$328 million.
Compounded by huge exchange losses, the foreign loans are seriously weighing down the company’s balance sheet (in local currency) driving the company to a loss making position.
In the 2021 financial year which ended in June 2022, the MNO managed to fork out US$16,7 million towards the different debt repayments including US$1,34 million to cover for the China Exim Bank loan.
Major among the loans upsetting NetOne are China Eximbank concessional loans which were extended for network expansion (NMBB) phases 1, 2 and 3, as the debt now stands at US$42,8 million, US$233,6 million and US$24,4 million respectively.
Additionally, the company total debt to the KfW development bank of Germany stands at US$25,9 million, which was provided for the company’s cellular mobile system expansion.
Huawei is owed US$2,2 million which was a loan drawdown deposit funding provided through ChinaExim.
Due to the mammoth debt, NetOne incurred $9,6 billion in exchange losses in the first six months of 2022.
It thus pleaded with the Reserve Bank Zimbabwe (RBZ) to prioritise its foreign exchange requirements so that the firm would timeous repay the debts which had come to haunt the company’s balance sheet.
Recently at the company’s annual general meeting NetOne chief financial officer, Tinashe Hama said his company had serious intentions to clear the debt overhang on time before the 2022 financials.
“The exchange losses that we are facing seriously affect our financial position at the end of the day, we have legacy loans sitting at US$328 million at the moment including interests, these are legacy loans and we are engaged with the regulator and RBZ for us to access foreign currency so that we settle this, and we are hopeful that we will be able to clear this before the next set of financials.
“Our endeavour is to make sure that we do timely repayments towards these loans,” said Hama.
He said the NetOne business is predominantly financed through debt, particularly for the procurement equipment for network expansion to reach all corners of the country.
Hama said the movement in foreign exchange market, did not spare the company as it resulted in us accounting for 9,6 billion in exchange losses in the year 2021 which negates the company’s good performance which led to a negative comprehensive income.
NetOne board chairperson Susan Mutangadura said the company carries legacy loans that were inherited from as far as the days of the company’s unbundling from the Postal and Telecommunications Corporation in 2000.
“Accounting for these USD denominated loans is negatively affecting the company’s balance sheet and this is exacerbated by the impact of foreign exchange losses,” said Mutangadura.-newsday
