21 September 2018

Zimbabwe: NetOne Swings to Profitability

State-owned mobile network operator NetOne swung to profitability in the eight months to August 31, 2018, as profit rose 105 percent to $1,3 million from a loss of $26 million in the prior comparable period.

Last month alone, the firm recorded the highest monthly profit (since 2016), which jumped 105 percent to $0,4 million from a loss of $7 million recorded in August 2017.

Revenue for the month of August alone amounted to $10,3 million, representing a 8 percent growth on last year. This was also the highest monthly turnover since restructuring in 2016.

Earlier in March, NetOne implemented tariff adjustments and this has helped improve the mobile operator's revenue streams, and management anticipates to maintain this growth trajectory into 2019 and beyond.

"In line with our strategy to give superior customer experience, NetOne will now reposition itself as a value network.

"The tariff adjustments which were implemented in March 2018 and resulted in revenue growth well ahead of 2017, have proven to us that there is equity in our brands.

"With dynamic billing and real time profiling of customers, which the new billing system will bring, NetOne will exit 2018 a vibrant and profitable mobile network operator," said acting chief executive officer Nkosinathi Ncube.

In addition to the new tariff, NetOne is upbeat its new billing system set to be launched next month will further improve its earnings.

The new state of the art converged billing and business support system will entail the complete scrapping off of its old and inefficient billing system which cost the mobile operator millions in revenues as subscribers migrated to competitors.

According to NetOne management, the system will offer seamless services across all the end-users including prepaid, post-paid and hybrid customers.

In October last year, NetOne also revamped its mobile money transfer service to OneMoney from OneWallet, which management at the firm said was ready to take on competition and should make a positive contribution to total earnings on the back of continual growth in mobile money services.

However, market watchers say the firm still has a long way in to claim a significant market share as it still has to grow its overall subscriber base as well as mobile money agents.

Between 2013 and 2016, NetOne benefited from Government guaranteed loan of over $285 million from the China-Exim Bank to transform its business, although some operational gaps still existed which affected efficiency and earnings.

Following an overhaul of its business in 2016, the mobile operator battled legacy costs of non-compliance relative to statutory obligations, irregular contracts and abrogation of basic procurement.

This led to once-off payments in penalties and interest payments of more than $25 million out of its 2017 revenues.

Additionally, significant exchange rate losses on the Chinese loans also had a knock on effect on the 2017 earnings.

Overall, further growth is anticipated in the telecoms sector driven by increased internet and data usage and mobile money services.

In 2017, mobile revenues increased by 17,6 percent to $849 million while internet access providers registered the biggest revenue growth of 17,8 percent to $186 million, according to regulator - Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz).

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