The operating environment remained challenging for the Group characterized by lagging tariffs, power shortages and a depreciating local currency. For the period under review, load shedding averaged 18 hours a day. Consequently, the business resorted to alternative sources of energy to power the network which significantly increased the business’ cost of providing services to customers. Tariffs continued to lag, threatening the long-term viability of the local telecoms sector and making it difficult for the sector to invest appropriately to meet customer demand. Despite voice and data volumes increasing by 19% and 58%, respectively, these improvements were offset by sub-inflation tariffs resulting in a decline in revenue in real terms in FY23. The Regulator granted the sector three tariff adjustments of 61% each and a fourth adjustment of 50% during the year. However, the tariff adjustments were not adequate to offset the increase in inflation which closed at circa 275% in February 2023. EBITDA also registered a decline in FY23 compared to same period last year. The reduction in profit margin was partly attributable to low revenues due to sub -optimal tariffs coupled with cost pressures experienced under the hyperinflationary environment. As a result of the exchange rate movements over the last twelve months, the business recorded significant foreign exchange losses which represented 23% of revenue against a prior year comparative of 6% virtually eroding any possibility of achieving an accounting profit. Regardless, the business invested US$66mn as part of its network modernization program. Network expansion and upgrades remain imperative to support business sustainability, which has been hampered by several years of under investment, due to ongoing macro-economic challenges. Subsequent to the year end, the Company’s debentures matured at the end of April 2023. The Company has been unable to secure foreign currency for the purpose of redeeming the debentures via the RBZ’s foreign currency auction process. Whilst the Company does generate some foreign currency from its operations, this is being deployed to pay for essential mobile network and related technology upgrades and expansion. Accordingly, the Company has announced renounceable rights offer to raise US$30.3mn of foreign currency from its existing shareholders and has received a preliminary response from the Reserve Bank of Zimbabwe. The RBZ is waiting for shareholders’ approval for it to give its final approval of the proposed rights offer. The Directors resolved not to declare a dividend for the year due to the need to capitalize the network.
