TelOne Zimbabwe – The Story of Africa

The Zimbabwe Independent paper reports that the Zimbabwean government is putting plans in motion to take up TelOne’s legacy debt under a debt warehousing initiative.

TelOne, which was established after the unbundling of the then Post and Telecommunications Corporation (PTC) in 2000 inherited a debt, which has been haunting it. The debt, which stood at USD 374 million as at October 2017, has been said to be responsible for weighing down operations at TelOne.

This script is familiar and it is one that results in everybody losing out. Taxpayer funds are spent in hopeless cases across the continent and even after many years, there are hardly any cases of successful rescue of such companies. Yet governments will not relent in attempts to save companies that have outlived their usefulness and have become mere sinkholes for taxpayer funds. These legacy operators, which used to enjoy monopoly, now continue to limp along. They are sustained only by the indiscretions of the ruling elite, for several possible reasons:

  • Government getting into (or remaining in) businesses that it does not understand. Truth be told, the vast majority of characters who dot the african political scene should not be trusted to manage a cattle dip. Asking them to review telecoms business cases, understand & direct strategy and contend with markets where competition can only increase, is a tall order in deed.
  • Powerful connected members of the ruling elite use these companies as reliable conduits to keep siphoning money out of public coffers. The supply chain of these companies has no shortage of entities owned or linked to the fat cats.
  • Pure vanity also has a role to play.The strong but wholly irrational need to maintain “local” companies that are “home-grown” and which provide employment to “our people”. This type rhetoric routinely goes up during election years.

I have attended conferences where presenters from African countries show slides depicting the ranking of the operators in their countries at the start of the presentation “to provide market context”.  It is never surprising that the last position is normally reserved for the government-owned company. One has to wonder: what is the impact of this dead wood on the telco industry in that country?

Could it be that the regulators keep slapping us with heavy fines because they need to keep rescuing these overgrown pets and therefore well-run companies have to generate enough money to keep up these games? Aren’t these poorly performing companies simply holding spectrum that they barely use but when they go to sulk at the regulators’ offices, they walk off with acres of spectrum?

African professionals in telco risk management need to start examining and communicating the impact of the dead wood that is the favourite first son who is always fed by Big Papa.

Joseph Nderitu
Joseph Nderitu
Joseph Nderitu is a consultant who specializes in revenue assurance. He is currently contracted as Head of Revenue Assurance and Fraud Management at Vodacom's operation in Tanzania, having previously served in the same role at Vodacom Mozambique.

Before his work with Vodacom, Joseph was an internal audit manager for Airtel, with responsibility that covered their 17 countries in Africa. Whilst at Airtel, Joseph led reviews of the Revenue Assurance, Customer Service and Sales & Marketing functions.

Prior to his stint at Airtel, Joseph was an RA manager at Safaricom in Kenya. He holds an MSc Degree in Information Systems.