Zimbabwe state-owned ISP Powertel is implementing a three-year strategy to return to profitability after the Auditor General said the company’s ability to continue as a going concern is uncertain.
The government has decided to merge loss making Zimbabwe parastatals that include telecom companies. To this end, Powertel is to be merged with ISPs Africom and Zarnet, a state-owned venture that Harare used to buy a stake in Telecel Zimbabwe.
According to the Zimbabwe Auditor General’s office, Powertel incurred a loss before tax of US$3 million for the year to December 2017. Its current liabilities also exceeded its current assets by US$6.4 million.
In her report released this week, Auditor General Mildred Chiri said, “These conditions indicate the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue operating as a going concern.”
She added that Powertel’s operations “continued to be hampered by shortage of working” with total revenue for the 2017 full year declining from US$25.7 million to US$25.1 million.
However management at the company say they are implementing a turnaround strategy to stem the losses and grow earnings.
“The company has come up with a three-year strategic business plan which is expected to return the company to profitability this year (2018),” reads an excerpt from a statement issued by the company.”
Executives at the company added that Powertel has “faced cash-flow challenges emanating from liquidity challenges being experienced” in the wider Zimbabwean economy.
“Efforts to improve collections from customers including engaging legal firms for recovery of long outstanding debts have been adopted. The company has not been able to keep up with payments of statutory obligations,” Powertel sated..
State-owned tech ventures like NetOne and TelOne are also struggling and have resulted in government implementing measures to contain excessive capital flows to these companies.