Treasury bungles TelOne $46bn debt plan

ZIMBABWE’S sole landline line telecoms services provider, TelOne has been thrown off balance by Treasury’s prolonged delays in restructuring a $45,6 billion legacy debt inherited from the Postal and Telecommunications Corporation (PTC) over a decade ago, NewsDay Business has gathered.

TelOne assumed the debt, now estimated at US$419,5 million, during a bold revamp of PTC, which also unbundled ZimPost and POSB Bank.

The plan was to warehouse the debt and restructure the firm’s balance sheet, giving impetus to its search for funding and investors.

The strategy involves coming up with a plan that relieves TelOne of the debt burden, by possibly transferring it to government, which would be good news for managing director, Chipo Mtasa, whose expansion plans have been jeopardised.

An official at the ICT, Postal and Courier Services ministry said during TelOne’s 8th annual general meeting (AGM) last week, Cabinet had approved the warehousing plan three years ago.

Subsequently, relevant paperwork was submitted to the Finance ministry, which has been procrastinating in taking action.

“In 2019, Cabinet approved the warehousing of the TelOne debt,” ICT ministry finance and administration director Dominic Bundu told the AGM.

“The Ministry of ICT and TelOne has submitted all requested documentation. However, this process has been sitting with the Ministry of Finance and Economic Development for the past three years, affecting TelOne’s ability to attract fresh investment,” Bundu said.

The debt has also courted concerns from ICT minister Jenfan Muswere, who told the AGM that with TelOne drowning in unsettled PTC commitments, its financial positions would remain compromised.

“Our position has always been clear,” he said.

“TelOne needs capitalisation for it to be able to upgrade and expand service offering. Unfortunately, the company has not been able to attract any new funding since 2016 due to its unhealthy balance sheet. It is, therefore, a matter of urgency that the warehousing issue is concluded and we are in discussions with the Ministry of Finance to have the process expedited.”

Last week, Auditor-General Mildret Chiri cast doubt over TelOne’s going concern status, citing the big debt.

TelOne has had to endure a six-year-long fresh capital drought after China Exim Bank last released funding in 2016.

Officials say most of this windfall was exhausted within a year.

TelOne board chairman Douglas Zimbango said the telecoms entity kicked off a balance sheet restructuring programme last year to raise funding.

Under the plan, the firm plans to sell off redundant assets to raise funding.

“In addition, the growth in revenues has enabled TelOne to reinvest more of these internally-generated funds in capital expenditure as shown by the increase in capital expenditure to revenue ratio from 8% in 2020 to 9% in 2021,” Zimbango said.