Eng. Samuel Maminimini Powertel Managing Director

Eng. Samuel Maminimini Powertel Managing Director

Powertel Not Out Of Danger Despite Loss Reduction

Powertel has registered a significant revenue increase of RTGS$705 000 from 2018 while its trading books are still reflecting a loss, revealed the Managing Director Engineer Samuel Maminimini during a Parliamentary Portfolio Committee on Information,Communication Technology,Postal and Courier Services appearance.

In the last trading period of 2017 Powertel revenue was at RTGS$25.6 million and as at December 2018, they posted a revenue of RTGS$26.3 million.

Eng. Maminimini said the company has improved revenue collections coming from a period where they are self sustaining without any capital injection.

“Powertel survives from its own sales, this is constraining in such a highly technological environment where we are competing with heavily invested operators, however we have sustained from very little investment where largely our own sales are the only sustainable means.” said a powertel executive.

According to a report submitted to the Parliamentary Portfolio Committee , Powertel, state-owned Internet Access Provider(IAP), recorded a loss before tax of $360 365 as shown in their unaudited 2018 financial performance report.This is a huge reduction from the $3 million loss they suffered in 2017.

The telecommunications business now requires companies to be more capital intensive as demand soars and competition intensifies. Powertel has been struggling to cope with the demand and invest heavily in infrastructure that can turn their fortunes in terms of revenue around.

According to the report submitted before the Portfolio committee on ICT, the IAP’s loss making trend has been continued with the heaviest loss of US$3 million having been recorded in 2017.The loss is attributable to very slow revenue growth since 2014 and increasing operating costs under the same period.

The Potraz Sector Performance Report Q4 notes that Powertel had 9% of the IAP revenue market share,a 1% decline from the previous quarter.In a sector that is becoming more competitive any negative change on the market share revenue will have ripple effects on the balance sheet and in the case of Powertel positive gains will not be recorded any time soon based on financial performance over the past three years, unless the major shareholder, government changes their investment policy.

Government has been birthing enterprises which they do not bankroll with any Capex, in an environment where giants are heavily investing in infrastructure and technology, forcing parastatals to play second fiddle.

In their submission , Powertel attributed foreign currency unavailability as the main reason their quality of service has been adversely affected as some vendors have stopped providing critical maintenance due to non-payment of costs.They also need to be allocated foreign currency for infrastructure projects which they are in the process of implementing, equipment maintenance and contract execution.

Zimbabwe is a landlocked country and internet service provision is costly as most IAPs have to have to get connected to fibre optic cables and wireless networks. For fibre optic cables they are both aerial and underground which means they require massive civil works for new provisions and maintenance.On wireless networks there are base station sites which are rented and require security costs that are associated with remote sites.All this work requires foreign currency and Powertel continues to be affected by its unavailability.

The government has earmarked loss making Zimbabwean parastatals that include telecom companies for mergers. To this end, Powertel became the first parastatal to be reformed by being unbundled from Zesa Holdings and being merged with ISPs Africom and Zarnet, a state-owned venture that the government used to buy a stake in Telecel Zimbabwe.

The merger is expected to improve the fortunes of the struggling IAP. In November last year, Powertel came up with a three-year strategic business plan which is expected to return the company to profitability by stemming the losses and growing the earnings.

The biggest missing link is capital investment which drives these companies to profitability and government is not playing its role as shareholders to fund, otherwise must quickly find better investors to manage the asset for value preservation and creation.

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