Telecoms sector reels under socio-economic implosion

By Staff reporter | 06 Dec 2019 at 16:45hrs
Zimbabwe is battling with a myriad of economic ills and the telecoms industry has not been spared. The biggest problem has largely hinged on high tariffs across all services. Coupled with the punitive 2% tax on all electronic transactions, mobile transaction services have become unbearable for many.

Despite all these problems, NetOne introduced zero rated transactions on its mobile wallet, OneMoney until end of December. Business reporter Melody Chikono (MC) spoke to NetOne CE Lazarus Muchenje (LM, pictured) to understand this and other issue affecting the entity and its proposed privatisation. Below are the experts of the interview:

MC: Government indicated that NetOne is one of the parastatals that is set to be privatised at the end of this year and there has been talks around that. Could you give us an update around NetOne privatisation and if you still think it is possible to meet the end of year privatisation target?

LM: The privatisation of state-owned enterprises is being spearheaded at government level (as the shareholder) through the various inter-ministerial committees who are responsible for selecting transaction advisers to assist with the implementation of the privatisation processes. To this end, any updates pertaining to the privatisation status are best addressed through the relevant structures.

MC: You have introduced a number of initiatives to encourage the uptake of your products. What can you say about your subscriptions and products uptake in the past two years to date?

LM: NetOne has been on a growth trajectory over the past year. This has seen increased uptake of all our products and services which has resulted in our data contribution to revenue of over 40%. There has been an upsurge in our subscriber base which has seen us doubling our subscriber market share.

MC: On OneMoney, one of the challenges has been that you are connected to a few banks, making it difficult to absorb the masses who want to access banking services through the platform. What have been the challenges in getting OneMoney connected to all the banks?

LM: This is not a challenge for us at all. As a matter of fact, OneMoney is connected to all banks via the ZIPIT platform. This brings added convenience to our customers as they are able to transfer money to and from any bank instantly via ZIPIT, thereby eliminating the need to link one account to the wallet through direct integration. In addition, OneMoney comes with a ZimSwitch enabled debit card which allows our subscribers to swipe at any point-of-sale machine nationwide, even those without a OneMoney merchant code.

MC: What other features do you offer?

LM: OneMoney has a host of other features that include payment solutions, short-term micro-loans, agent lines, merchant codes, cardless merchant purchases and biller codes. Because of its integration and availability on the ZimSwitch platform, ZIPIT, OneMoney connects customers to all 19 banks complemented by a ZimSwitch enabled debit card to allow swiping at all POS Machines nationwide.

Furthermore, OneMoney is an official payment channel for Zimbabwe Revenue Authority (Zimra) through which individuals and companies alike can remit taxes and duties, etc. OneMoney is currently running several promotions that provide added value to customers. NetOne has recently launched "OneMoney 50% Bonus Airtime" promotion, which gives a whopping 50% discount to customers purchasing airtime with a value of ZW$10 and above, using the OneMoney platform.The bonus of 50% is redeemable as airtime for on-net and off-net calls, with a validity of 24 hours.

MC: You introduced zero rated transactions on OneMoney until December. What does this mean to your revenue streams in the meantime?

LM: As with any other promotion, a proper business case is done that looks at the cost-benefit analysis as well as the intended outcomes. I can confirm that there is no significant knock on our revenues. As NetOne, our focus is to lessen the financial burden of our subscribers by waiving charges this festive season as our Christmas gift to them. All other transactions will be for free till December 31 except for the statutory 2% tax and card swipe charges.

MC: What is your long-term plan for this platform to make it vibrant?

LM: As NetOne, we will continue to understand the needs of our customers, and eliminate their pain points through continuous innovation that will enhance customer experience and provide value added service offerings to our subscribers. OneMoney allows subscribers to sell airtime, transfer to and from banks, make payments, purchase Zesa electricity tokens and settle municipal bills creating convenience for customers

MC: What are your targets in terms of subscriptions versus current numbers?

LM: Overall, our goal is to convert every NetOne subscriber to become active OneMoney users as well. What can you say are the key challenges being faced by the telecoms sector in Zimbabwe? The telecoms industry, along with every other industry has not been spared by the current socio-economic challenges obtaining.

Key to note are the increasing operational costs driven by the need to achieve optimal network uptime and enable connectivity across the country. Costs are rising at a higher rate than our revenue generation capacity which is regulated and coupled with shrinking disposable incomes across all our target market segments.

The recent power outages have resulted in hundreds of our base stations being powered by generators which has increased our fuel consumption.

MC: How do you see NetOne growth of NetOne on this economic condition?

LM: Despite the economic conditions the quality of NetOne's service delivery through greater focus on operational efficiency, profit maximisation and cost containment premised on our "Back to Basics" strategic focus pillars which are quality network, quality distribution, quality contact centre and customer service as well as quality balance sheet.

NetOne has unparalleled network quality (consistently above 98,5%) which has increased NetOne's data and internet footprint — a direct result of the network optimization exercise carried out across the country. This involved re-farming of existing 3G sites and re-deployment of 3G and 4G equipment to areas of high demand so as to densify coverage and augment available capacity in these areas. 3G sites were upgraded from three-sector to six-sector effectively doubling the 3G capacity at the sites.

In addition, the strategic focus around network quality and improved network monitoring, reduced incidents of data packet losses, improved the quality of service and superfast internet speeds which resulted in a seamless customer experience that has continued to drive stickiness to the brand and doubled NetOne's subscriber market share.

This is supported by a quality distribution network which saw an introduction of a franchise model which has capacitated over a thousand SMEs with additional revenue streams through commissions, thereby augmenting their entrepreneurial activities. This distribution model has increased NetOne's geographical footprint whilst improving the accessibility of NetOne products within local communities.

A service excellence culture was ignited in all staff, which has seen NetOne not only getting rave reviews from independent service excellence surveys carried out by Potraz and Contact Centre Association of Zimbabwe — but has received service excellence awards to acknowledge the quality of responsiveness and service delivery from both its 24-hour contact centre and across all service touch points.

Lastly, we have made notable strides in restructuring our balance sheet which has seen a significant improvement in our working capital position by ZW$612 million from negative ZW$288 million in 2017 to positive ZW$324 million in October 2019. The company solvency position has improved significantly by ZW$502 million from negative ZW$77 million in 2017 to positive ZW$425 million in October 2019. All this is testament of an effective turnaround strategy that has seen NetOne remain resolute and financially sound.

MC: What are the lessons learnt from regional counterparts that the telecoms sector in Zimbabwe is failing to adapt to?

LM: The ICT sector is ever evolving in line with global emerging technological trends such as artificial intelligence, machine learning, big data analytics, blockchain, drones, augmented and virtual reality, crypto-currency, driverless cars, etc. The rise of 5G networks will increase our ability to move, manipulate and analyse data across wireless platforms.

As 5G is fully deployed over the coming years, it will drive the development of more complex problem solving apps and increase growth and innovation across all industries. 5G will enable speed and latency required for advanced smart technologies such as driverless cars, drones for smart agriculture, etc.

This will equip emerging markets to realise the same speed of business as that of mature counterparts, therefore embracing 5G ready capabilities will have profitable, early mover advantages across all regions.



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