Telecel lost over half a million subscribers

By Staff reporter | 12 Apr 2019 at 15:53hrs
Telecel, Zimbabwe's third largest mobile operator by subscribers appears to be in dire straits as it continues to sing the blues. According to the sector performance abridged Q4 sector report, Telecel Zimbabwe has lost slightly over half a million subscribers as the company's downward trajectory seems persists.

At its peak, Telecel was once touted as the next big thing in the mobile sector and was Zimbabwe's second largest mobile operator. Over the past few years, its continued loss of subscribers and failure to match rivals' massive network expansion has seen it fall down the pecking order to third place aftermarket leader Econet Wireless, and second place NetOne.

According to the Postal and Telecommunications Regulatory Authority Sector Performance Report of 2018. Telecel's performance showed no signs of positive gains where other operators managed to record growth.

Active mobile subscriptions increased by 1.3% to record 12,908,992 from 12,748,551 recorded in the third quarter of 2018. All the mobile networks, with the exception of Telecel, recorded growth in active subscriptions. Numbers have a lot of say when it comes to Mobile Network Operators (MNOs) and the latest numbers from Telecel are far from pleasing.

Zimbabwe is moving towards a digital economy and Telecel being partially owned by the government is not doing justice to complement efforts being made to ensure that all four corners of the country are covered through mobile services. With dwindling subscriber base and lack of recapitalization, it seems glory days are over and the sun is slowly setting.

According to the Sector Performance Report, Telecel's voice traffic market share declined from 4.2% in the first quarter to 3.8% in the last quarter. This decline is consistent with the decline in their subscriber base. Voice calls contribute a lot in terms of revenue and their surge has negative effects on the revenue.

Mobile internet and data utilization increased by 15.7% in the quarter under review as all the mobile operators recorded growth in mobile internet and data usage. Mobile internet and data usage has been consistently increasing during the course of the year and Telecel moved by 0.1% from first to last quarter and this is attributable to a declining subscriber base and low connectivity.

Over the years, recapitalization of Telecel has made headlines especially after the government acquired a 60 percent stake in the ailing company after buying out VimpelCom through ZARNet in a US$40 million transaction.

The company said it will inject US$540 million into its operations over the next five years to improve service to its subscribers. Telecel CEO Mrs Angeline Vere revealed the plan during a familiarisation tour by the Parliamentary Portfolio Committee on Information Communication Technology and Courier Services in March this year. The committee wanted to understand the operations of the mobile network operator, its operational challenges and how Government as a major shareholder could assist it in overcoming them.

"Telecel is looking at a five-year investment plan, in total we are looking at US$540 million spread over five years with the biggest investment in the first two years. The investment will bring the network into the modern era. We will have 4G which will assist a lot of businesses in Zimbabwe. We are looking at giving a smart service to the generality of Zimbabweans through that investment, so our customers out there should expect a very modern network." said Mrs Vere.

The downward surge Telecel is going through is attributable to poor revenues as the company sinks deeper into serious financial woes that have seen creditors issuing a litany of summons and letters of demands to recover funds. Another cause has been perennial shareholder tussles that have reflected negatively on its bank balance, thus exposing its weak balance sheet that has been hit hard by a sagging subscriber base.

Telecel has been lagging behind in terms of infrastructure as compared to other MNOs who up to date continue to invest heavily and their numbers in many aspects tell a different story altogether. The total number of base stations in the country was 8,796 as at 31 December 2018, up from 8,662 recorded in the third quarter following the commissioning of 134 additional base stations. Base stations are integral in boosting subscriber base and efforts by Telecel to increase them and even investing in the latest LTE base stations are disheartening.

On the mobile money front, The total number of active mobile money subscriptions was 6,352,552 as at 31 December. this represents 1.6% growth from 6,252,538 recorded in the third quarter of 2018. Of this growth, Telecel through TeleCash accounted for a paltry 1% which in real essence is a drop in the ocean as compared to how other mobile money services have faired.

The latest Potraz report paints a gloomy picture of Telecel, numbers do not lie and the shareholders have a mammoth task to try resuscitating a company that has been embroiled in a lot of squabbles. The company has been a perfect example of bad governance, heavily indebted and arraigned before the courts for non-payment of services and it seems more is coming as the owners are off the radar.

One is quick to question the role of the government which is a major shareholder in Telecel as it has failed to do more for the company. When the government made an acquisition of Telecel it had 1081 mobile base stations, between November 2016 and 30 June 2018 it added 4 base stations. During that period Econet added 613 mobile base stations and Netone added mobile base stations.

From such a standpoint it suffices to say that just like TelOne and NetOne, Telecel should also be earmarked for privatization if its ever going to survive in an ever-expanding industry.



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