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NetOne Cellular (Private) Limited – a company wholly owned by the Government of Zimbabwe, weathered all storms in the 2021 Financial Year and registered significant growth.
This emerged today, 17 August 2022 at the company’s Annual General Meeting held at the Rainbow Towers Hotel in Harare.
Following the presentation by the NetOne management of the 2021 performance, the year 2022 first half year review, and second half year outlook, Dr. Jenfan Muswere, the Minister of ICT, Postal and Courier Services, in a speech read on his behalf by his deputy in the same ministry, Dr. Dingumuzi Phuti hailed NetOne for its resilience and dedication over the period of twenty-five years wherein despite the various challenges that the company faced, it weathered all storms and focused on ensuring that subscribers have connectivity.
He said while the year 2021 started as a difficult year, considering that COVID-19 threatened to bring the world to its knees because of lockdowns in the country and beyond its borders, travel restrictions opened up doors for NetOne to provide customers with products that were tailor-made to suit their needs.
“I must commend the business for its sterling efforts in ensuring that there was connectivity in the residential areas that enabled the customers to carry out their work and attend lessons as well as handle their financial transactions. The Company registered a subscriber growth of active subscribers which closed off the year at 4,470,592 showing a net growth of 779,278 subscribers in a single year from the 2020 closing base of 3,691,314 subscribers. As a result, NetOne’s market share grew significantly from 28.0% in 2020 to 31.4% by the end of the year 2021. It is clear that this growth was mainly due to the fact that customers were attracted by the products and services offered by the company which enables them to carry out their business and activities,” the minister said.
Below, Spiked Online Media reproduces Board chairperson, Ms. Susan Mutangadura’s statement:
Chairman’s Statement
The heritage and history of NetOne Cellular (Private) Limited extends back twenty-five years, having celebrated the Company’s silver jubilee on 25 September 2021. This was a moment to reflect on milestones and successes attained over a quarter of a century. It was also a period to revisit and draw lessons from the unprecedented challenges that affected the operations of the business while celebrating the Company’s achievements.
The effects of the Covid-19 pandemic continued to be felt into 2021. The Zimbabwean economy however rebounded on the back of recovery in agriculture and the phased reopening of the economy. In addition, there was a relative stabilisation of prices and exchange rates. Whilst month-on-month inflation was stable throughout the year maintaining single digit values, annual inflation fell from a high of 349% in December 2020 to 61% by December 2021. GDP grew by 7.4% in 2021 after contracting by 6.2% in 2020. An exceptionally good agriculture season, coupled with slowing inflation and higher foreign currency remittances boosted domestic demand. Relaxed pandemic restrictions, good vaccination levels, and favourable terms of trade supported stronger industrial production and exports, with exports of minerals expanding by over 51% in a year. There was also a marked increase in international reserves courtesy of the improved current account surplus.
The business benefited from its designation as an essential service during the Covid-19 pandemic lockdowns, as well as increased demands for its products. During the period under review, the business witnessed growth in both revenue and subscribers. Whilst nominal revenue grew by 263% from ZWL4.145 billion in 2020 to ZWL15.036 billion in 2021, inflation adjusted revenue showed a growth of 96%.
Concerted efforts by the business to drive the digital transformation strategy led to data contributing 51% of the total revenue. Active subscribers closed off the year at 4,470,592 showing a net growth of 779,278 subscribers in a single year from the 2020 closing base of 3,691,314 subscribers. As a result, NetOne subscriber market share grew significantly from 28.0% in 2020 to 31.4% in 2021.
During the period under review, the Company witnessed growth in revenues and customers who subscribed to NetOne Mobile Financial Services (MFS). Stringent measures were put in place to ensure that the services offered under MFS were in compliance with the legal requirements and the directives issued by the Financial Intelligence Unit of the Reserve bank of Zimbabwe from time to time.
Revenue for the year grew by 96% to ZWL18.6 billion from ZWL 9.5 billion in the prior year. Overheads grew by 46% with the major cost drivers being network, staff and marketing costs. Earnings Before Interest and Tax (EBITDA) was ZWL9 billion up from ZWL3.2 billion in prior year. A healthy EBITDA margin of 48% was recorded. The Company continued to be weighed down by the huge exchange losses on the foreign loans leading the Company to a loss making position.
Capital expenditure was ZWL1 billion, mainly driven by the NMBB Phase III network expansion project.
The Company continued to face challenges in accessing foreign currency, given that the greater part of operating costs for a mobile telecommunications company are paid in USD, with vendors for equipment and systems used to run the network demanding payment in foreign currency. The situation was exacerbated by the power challenges experienced during the period under review which compelled the business to consider alternative sources of power. Reliance was placed on diesel generators with fuel being procured largely in USD to power base stations.
The Company commends the Government of Zimbabwe on the establishment of the foreign exchange auction market. This enabled the business to source the much-needed foreign currency that was required to pay vendors for the supply of equipment, maintenance, and support service fees as well as fuel. The Company continued to lobby for the allocation of more foreign currency required for the business to meet its foreign obligations and for the delivery of the latest technology to enable the business to offer customers world class services.
The Company carries legacy loans that were inherited following the unbundling of the Postal and Telecommunications Corporation in 2000. Accounting for these USD-denominated loans negatively affects the Company’s balance sheet. This is exacerbated by the impact of foreign exchange losses. The line Ministry, the Ministry of Information Communication Technology, Postal and Courier Services has provided tremendous support in the efforts by NetOne to warehouse these legacy loans.
On 20 September 2021, His Excellency the President of the Republic of Zimbabwe CDE Dr. E. D. Mnangagwa officially launched the third phase of the National Mobile Broadband Project valued at USD71 million. This project will see the Company ushering in the latest products and services to its customers, giving customers the feel of experiencing their whole world at a press of a button – ‘world in one’.
Corporate Social Responsibility
Corporate citizenship dictates that we respond to our duty to transform lives and improve livelihoods by ensuring that the business uses the environment responsibly so that future generations have a clean and safe environment. We have over the past year been engaged in various community programs that transformed the lives of many Zimbabweans. We took it upon ourselves to join our Government in the fight against Covid-19. Together with our sister company TelOne (Private) Limited, we refurbished wards at Sally Mugabe Hospital, Mpilo Hospital, and Beatrice Infectious Diseases Hospital. Boreholes were drilled at the three hospitals to alleviate water shortages. We continue to repair the refurbished hospital wards ensuring that they are habitable. We also service and maintain the boreholes to ensure that there is clean and safe water at the hospitals.
The Company participated in various initiatives aimed at protecting the environment like tree planting and the national clean-up campaigns. Activities aimed at empowering the youth as well as improve the quality of education in the country were undertaken. The Company donated a classroom block at Bunsiwa Primary School in Binga. Donations were also made to old people’s homes, children’s homes, and homes that cater to the disabled.
Our goal is to embed social and environmental considerations into our business in ways that create value for the Company and our stakeholders. As a responsible Company, it is clear that how we do business is just as important as what we do and why we do it. Our strategy reflects our goal of ensuring that we hand over a clean and safe environment to future generations. We strive to ensure that we fully contribute in areas in which we have the expertise to make a meaningful impact. Where we see opportunities to use innovative, tech-based solutions to help address major societal challenges and opportunities, we will ensure that we take part. Through this strategy, we will build our reputation as a trusted, sustainable business and draw on our tech expertise to play a leadership role in promoting digital inclusion and environmental action.
As a mobile telecommunications operator, we have embraced our mandate in terms of the NDS1 goals – ‘to modernize the economy through the use of ICTs and digital technology’. We will not leave any place nor anyone behind as we strive to ensure that we provide customers from all walks of life with products that meet their specific needs.
Delivering value through collaborations
The business delivered value through building strategic alliances with players in various industries. NetOne entered into infrastructure sharing agreements with Econet and Telecel. This has greatly improved service delivery in areas where the parties had not rolled out their network. We are indebted to POTRAZ for the allocation of funding for the redeployment of sites under the Universal Service Fund. The funding enabled the Company to redeploy base stations to areas that did not have coverage thereby enabling it to fulfill its mandate to digitalize the economy and provide ICT services.
The Company also partnered with the Zimbabwe National Water Authority (ZINWA) in the deployment of prepaid water meters. This product has enabled customers to be in control of their water usage. NetOne also partnered with ZETDC in the distribution of electricity tokens.
The Board of Directors of NetOne Cellular (Private) Limited recognizes and upholds principles of good corporate governance. The Board oversees the development of the Company’s strategies, aligning the same with shareholder expectations, and ensures that there are adequate internal controls in place. The Board is determined to deliver long-term value to the shareholder. This is achieved through ensuring that the business is run professionally and operating in terms of the legal and regulatory framework under the mantra of zero tolerance to corruption.
In its oversight role, the Board also ensures that the business is adhering to the provisions of the Public Entities Corporate Governance Act [Chapter 10:31] and that the business is not embarking on fruitless expenditure as prescribed by the Public Finance Management Act [Chapter 22:19].
The business also complies with the provisions of Section 194 and 195 of the Constitution of Zimbabwe 2013 which calls upon all State Owned Entities to have a high standard of professional ethics, efficient service delivery, and uphold the principles of openness, integrity and accountability in order to ensure good corporate governance.
During the period under review Engineer Taurayi Maurikira, Mr. Gibbson Gibbs Jumbi, Dr. Talon Garikayi, and Mr. Kudakwashe Musundire were appointed to the Board of Directors and brought with them diverse skills and expertise which has enhanced the quality of strategic leadership provided by the Board.
The business is expecting to complete the implementation of the third phase of the National Mobile Broadband project which was launched by His Excellency CDE Dr. E. D. Mnangagwa.
The business will also complete the implementation of the new converged billing system which will enable the business to offer more value added services, and will complete the deployment of the revenue assurance and fraud management system. This system will enable the business to curb revenue leakages. The business will also deploy the relevant solutions that will protect NetOne systems against cyber security threats.
The Company continues to diversify its revenue streams through innovation and availing new products and services to the market. In order to reduce the operating costs and also protect the environment, NetOne (Private) Limited has put in place plants to make use of green energy in powering its sites and operations.
As a business we will strive to ensure that we offer our customers tailored products that can easily be put into the operation and configure intuitively thereby enabling seamless connectivity, whether customers are mobile consumers, live streaming, video on demand, businesses, farmers and students will receive the best offering customized to their individual needs with the highest connection quality. As a business, we will not stop dreaming and exploring in order to recognize and leverage growth opportunities beyond our core business as we believe that the backbone of the future is mobile telecommunications solutions.
My sincere gratitude goes to our subscribers, our shareholder, regulators, suppliers, business partners and our various stakeholders for their invaluable support during the year 2021.
It makes me truly proud to see what NetOne Cellular (Private) Limited employees have achieved under trying circumstances. Our employees demonstrated remarkable resilience and resourcefulness as they embraced new ways of working, including working from home. The frontline team members also braved it all and ensured that NetOne shops were manned during this period.
I am grateful to my fellow board members and the entire NetOne Cellular (Private) Limited team for their agility, sacrifices and commitment in our journey to position NetOne Cellular (Private) Limited as the flagship state owned entity in Zimbabwe.
I look forward to your unwavering support throughout the year ahead. May God Almighty continue to protect us.