Tawanda Musarurwa Senior Reporter
Fixed telecommunications services provider TelOne is at risk of losing its shareholding in bandwidth wholesaler West Indian Ocean Cable Company (WIOCC), managing director Chipo Mtasa has said.
TelOne has been struggling to meet its United States dollar obligations to WIOCC to the tune of US$10 million, but failure to meet the financial commitments could further place the company into predicament as broadband is the cornerstone of its business.
By virtue of the shareholding in WIOCC – the largest shareholder in the EASSy undersea cable – TelOne has the ability to bring guaranteed international bandwidth capacity of up to 96 STM1s, which can last for generations.
And through WIOCC, TelOne also has access to the West Coast Cable Systems (WACS), the cable connecting Africa to Europe; and Asia (EIG), the cable system connecting Southern Africa to Europe and Asia (SAT 3 and SAFE), Seacom, Sea-Me-We 3 and several cable systems around Africa.
These connections have resulted in TelOne being able to land internet capacity into Zimbabwe at a lower cost and with full diversity catering for Zimbabweans across the spectrum.
But that is all on the line.
“On WIOCC, definitely our shareholding is at risk. We have had different threats that have come through. And these are issues that we have alerted our authorities. We actually risk losing the shareholding if we don’t service the debt,” said Mrs Mtasa.
“We are currently engaging the Reserve Bank of Zimbabwe to see if we can get a workable payment plan.”
WIOCC offers carriers affordable, reliable connectivity to over 400 locations across 30 African countries – utilising more than 50 000 kilometres of terrestrial fibre and 40 000 kilometres of submarine fibre optic cable.
WIOC’s international network reach currently extends to 100 cities in 29 countries in Europe and more than 700 cities in 70 countries globally.
TelOne is highly dependent on foreign currency to sustain operations, with the MD saying that the infrastructure side of the business sees 90 percent of its requirements being imported, and the local component of labour accounts for the balance.
Similarly, she said 85 percent of TelOne’s retail business requires foreign currency, while the balance of 15 percent is accounted for by fuel and labour, which can be covered in local currency.
Last year, TelOne received US$6,7 million from the RBZ, and between January and February this year, the company received US$552 000, which is hardly adequate to cover costs.
The opportunities provided by TelOne’s stake in WIOCC have given the telecoms company opportunities to generate foreign currency, and the MD said they are looking to leverage on these available opportunities.
“But the green-shots, which are beginning to emerge give us the opportunities to then share and exchange traffic because of the broadening of our capacities with the links that we are opening up.”
According to Mrs Mtasa, TelOne is working on a deal that could raise US$3 million, which could go towards partially offsetting the US$10 million debts to WIOCC.
“The areas where we can generate forex is where we have foreign interconnection traffic. We also generate forex by carrying IP bandwidth across to the other regions.
“With the opening of the Beitbridge link (Beitbridge to Harare), we are beginning to see a few opportunities to generate forex because of other players who are seeking alternative IP bandwidth traffic,” said Mrs Mtasa.
“Right now in Bulawayo we actually stitching up a US$3 million deal and once that is signed, it is one area where we are actually going to reduce our indebtedness from US$10 million to US$7 million. It’s not the only deal, but for us this year it might be the largest deal of the year.”