TelOne landlines: Will they survive competition?

Business
THE mobile phone has changed the face of the world and re-defined the rules of communication and, consequently, relegated the fixed landline to the dustbin of history.

THE mobile phone has changed the face of the world and re-defined the rules of communication and, consequently, relegated the fixed landline to the dustbin of history.

Victoria Mtomba

Although some people still use landline phones for communication across distances, the numbers are increasingly declining as new multimedia technology takes strong hold.

Within the new dispensation itself, fast-paced developments have been witnessed. Although the first hand-held mobile phone introduced by Martin Cooper under the Motorola brand weighed 1kg, the in-thing now are feather–weight smart phones.

Trials for the mobile phone were carried out in trains running between Berlin and Hamburg, Germany, for first class travellers. The emergence of this new gadget has outpaced the use of fixed landlines in Zimbabwe.

With the mobile phone in hand, one has the world in their palm due to the multiple functions of the modern phone. Although communication across distances remains the major function through audio speaking, with the latest mobile phone varieties, one is able to text, watch videos, listen to the radio and browse the Internet.

Zimbabwe’s oldest telecommunications company, TelOne, has 470 000 fixed lines that are used by households and companies, according to managing director Chipo Mutasa. These include CDMA, a mobile fixed line, which can be used both as a landline or mobile phone.

Subscribers can also use it to access the Internet.

TelOne, compared to other players in the sector, has the smallest subscriber base, as its biggest market is fixed landlines whose use is, however, declining by the day.

Although landlines usage is low compared to mobile phones, fixed lines are the cheapest in the sector at five cents per minute as compared to mobile phones at 21 cents per minute.

“We have 470 000 fixed landlines and our subscribers are half a million,” Mutasa said. “The cost per minute is five cents compared to the mobile which is 21 cents and this is the cheapest.”

TelOne is one of the 10 parastatals earmarked for restructuring by the government.

Through the parastatals action plan, TelOne was supposed to be restructured in the first half of this year.

The government has failed to restructure some of the parastatals successfully due to bureaucracy as stated by the Parastatals and State Enterprises minister Gorden Moyo. The parastatals included Agriculture Development Bank of Zimbabwe, Zimbabwe Power Company, Agricultural Rural Development Authority, Air Zimbabwe, Grain Marketing Board, Zimre, POSB, Zimbabwe Grain Bag, Allied Timbers, NetOne, Zesa Holdings and National Railways of Zimbabwe.

Although progress has been made on Zesa Holdings in restructuring, the staff were still reassigned within the company as there are no funds to retrench the workers.

Analysts contend that the issue of restructuring parastatals was slow due to the fact that parastatals have corporate governance issues as well as huge debts. The economic environment does not allow investors to invest in this country.

Zimbabwe has 78 parastatals that record losses and are a burden to the fiscus, as they have to be financed through Treasury.

According to an action plan from the State Enterprises and Restructuring Agency, the engagement of a strategic partner for TelOne would enable the parastatal to take up equity through private placement for the expansion and rehabilitation and refurbishment of existing plant and equipment.

Transport and Infrastructure secretary Munesu Munodawafa said: “I cannot comment on it as it is a policy issue. You will have to talk to the minister (referring to Nicholas Goche).”

Goche, however, had not responded to the questions e-mailed to him by the time of going to print.