Mergers, Acquisitions and Financial Results

Fixed phone monopoly, Tel One has earned US$10 million (Z$2.5 billion at the official exchange rate) from its involvement in agriculture. Tel One is desperate for cash to replace its ageing equipment, over half of which is well past its use-by date, and is saddled with foreign debt of US$18 million, said Hamton Mhlanga, Tel One technical director.

"Financing of inputs into tobacco and horticulture will continue as a means of earning foreign currency. We expect to earn US$10 million from tobacco, which we will use to implement capital projects," said Mhlanga.

According to Mhlanga, over half of Tel One's equipment is obsolete and should have been replaced years ago. This means Zimbabwe cannot use any of the new technology in telephony that most telecoms companies worldwide are using to ramp up earnings.

"Most of the equipment we are using has outlived its useful life. We are having to go with non-repairable equipment. Value added services can't be provided using such equipment, which is more than 50 percent of what we have," Mhlanga said.

Tel One has followed power utility ZESA's lead into agriculture, giving further evidence that state-owned enterprises -- cramped by government controls on their pricing -- are not able to turn in profits from their operations despite their monopolies. Government has been reluctant to privatise companies such as Tel One, and attempts at attracting foreign investment has been foiled by investor fright at legislation that places a cap on tariff charges.

Total parastatal debt stood at $76.43 trillion in June, Finance Minister Herbert Murerwa said last Wednesday.

Tel One holds 32 percent of the overall telecommunications market, lagging behind mobile phone company Econet, which has a 38 percent share of the market. Financial Gazette