NetOne lobbies for more forex

NETONE says it is lobbying for access to more foreign exchange allocations as it seeks to meet its forex obligations, mainly loan repayments, maintenance and payment of support services including fuel.

Firms in the telecommunications industry are highly dependent on imported equipment and accessories that make them highly needy for foreign currency.

The requirement for foreign currency has lately been compounded by incessant power outages that now compel the business to rely on alternative sources of power like diesel generators whose fuel is procured largely in US dollars to power base stations.

NetOne’s total foreign currency earnings in the 2021 financial year stood at US$8,3 million.

Of that amount, a total of US$6,3 million
was earned in the first half of 2021, before the introduction of SI 127 in June by the Government.

The introduction of the SI curtailed NetOne’s foreign currency earnings by nearly 50 percent.

However, NetOne lauded the Reserve Bank of Zimbabwe (RBZ) for establishing the foreign exchange auction market , saying the platform had enabled the firm to source part of the much needed foreign currency.

In its first quarter trading update Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), implored the Government to consider prioritising foreign currency allocations to mobile network operators as operating costs continue to increase surpassing revenue growth due to inflation.

According to Potraz , the current economic environment is acting against the sector, calling responsible authorities to intervene at both the operator and fiscal levels.

The telecoms industry regulator highlighted that the current economic climate was characterised by depressed consumption and foreign currency constraints, which have manifested through reduced traffic volumes.

While speaking at the NetOne annual general meeting, board chairperson Susan Mutangadura indicated that the firm continued to face challenges in accessing foreign currency, given that the greater part of operating costs for a mobile telecommunications company are paid in US dollars.

“The company continue to lobby for allocation of more foreign currency required for the business to meet its foreign obligations and for delivery of the latest technology to enable the business to offer customers world class services.

“Vendors for equipment and systems used to run the network also demand payment in foreign currency,” said Mutangadura.

She added that the company continued to be weighed down by exchange losses on the foreign loans.

Speaking on the sidelines of the AGM, NetOne chief executive, Raphael Mushanawani, told Business Weekly that his firm had managed to receive foreign currency from the central bank albeit not being sufficient.

He, however, noted that going forward NetOne hopes to get considerable amount of US dollars that will take the telecommunications firm to the end of the year in terms of meeting some of its obligations.

“In the first half we managed to access forex from the auction but of course that has not been enough, and most of that we have rechannelled to make loan repayments and to reinvest onto the network,” said Mushanawani.

He, however, noted that interventions by the central bank had led the company to review USD products downwards.

“The RBZ financial intelligence unit (FIU) said all operators should reduce the amount of physical recharge cards in the market to 10 percent, so we have come up with new products that are selling in US dollar, but we have not seen much traction on that at the moment,” he said.

In 2021 NetOne’s revenue for the year grew by 96 percent while overheads grew by 46 percent with major cost drivers being network, staff and marketing costs.

Positively, in the year the business benefited from its designation as an essential service during Covid-19 pandemic lockdowns as well as increased demands for its products.

At the moment, NetOne is in the process of implementing the third phase of the national mobile broadband project valued at US$71 million, which will see the network usher latest products and services to its customers.

Telecommunications sector remains intrinsic to the country’s economic growth given that it is an essential enabler for other sectors as envisioned by the National Development Strategy 1 (NDS) thus need to enhance aspects that prop up the sector’s performance.

There have been growing calls from the telecoms sector players for concerted efforts in the consolidation of strategies that deliberately focus on ICT development and effective processes that embolden investments in ICTs, digital skills and embracing emerging technologies that are crucial to the digital economy.-ebusinessweekly