TelOne writes off $80m debt

Published: 21 October 2013

Embattled fixed line operator, TelOne, plans to write off overdue debts amounting to $80 million owed by residential subscribers.

The group - Zimbabwe's sole land line network company - has struggled to get payments from subscribers since dollarization of the country's economy in 2009.

It said the bills cancellation was "in line with the prevailing liquidity challenges obtaining in the country."
"In view of the cash-flow challenges currently facing our clients across the market, TelOne is pleased to announce a relief package to all its clients," said TelOne.

The group said each customer will have a total of $257,82 credited to their account.

"The adjustments will be effected on the October 2013 statements," said the telecommunications firm.

However, the cancellation of debt by TelOne comes as the company recently announced that it was launching a door-to-door debt collection campaign in August to recover over $300 million owed by its customers.

"The debt collection campaign is a nationwide campaign aimed at bolstering efforts by the credit control department. We are aiming at recovering $50 million from debtors during the next quarter," TelOne's managing director, Chipo Mtasa said then.

"This will help the company with the much-needed working capital to fund network expansion projects that will see TelOne deliver more products and services," she said.

Industry experts noted that most TelOne customers accumulated huge debts, some amounting to thousands of dollars, in the period of transition from the Zimbabwe dollar to the multi-currency regime in 2009.

"The hyperinflationary changes in money value before dollarisation meant billed amounts would be worth much less by the time the customers settled. So essentially, TelOne customers were paying close to nothing for the service. The change to the United States (US) dollar was swift and many customers caught unaware resulting in huge US dollars bills," said someone close the developments.

The result was that most closed their accounts leaving the debt unpaid, and numerous debt collection threats issued by the operator have largely been ignored.

"The issue of unsettled accounts has affected the uptake of other TelOne services like ADSL, as initially customers were not allowed to subscribe for new services until they settled all outstanding debts.

Eventually, TelOne did away with this requirement but it's not clear just how much uptake it resulted in," said the source.

Fixed line subscriber numbers in Zimbabwe have fallen from 325,000 to 301 650 according to statistics from the Posts and Telecommunications Regulatory Authority of Zimbabwe.

Increased competition from mobile operators and companies offering Voice over Internet Protocol (VoIP) telephony services are among reasons for the declining subscriber numbers.

Since the adoption of a multiple currency system - dominated by the United States dollar - Zimbabwe has experienced an acute liquidity crisis due to lack of aggregate demand in the economy, absence of cheap external lines of credit and the Reserve Bank of Zimbabwe's incapacity to act as a lender of last resort, among other challenges.

Market observers assert that the liquidity crisis in the country has resulted in most companies either shutting down or scaling down operations, forcing millions of people out of employment.

- dailynews

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