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Published On: Fri, Sep 2nd, 2016

TelOne cuts costs by 16pct in H1 amid revenue slowdown

BULAWAYO,— State owned fixed line operator, TelOne, has reduced its operating costs by 16 percent in the first six months of the year, benefiting from a year long rationalisation exercise.

TelOne cut wages by 15 percent across the board in August last year and tightened expenditure control.

Company spokesperson Melody Harry told The Source that such cost containment initiatives were necessary in the face of a harsh economic environment.

“The first six months have seen the company registering total revenue of $59 million (against $69.2 million over the same period of 2015). With the apparent slowdown on the revenues, the company has heightened its focus on cost cutting which has seen operating expenditure go down by 16 percent from prior year,” Harry said.

She said the company has established three divisions as profit centres and a deliberate segmentation of their markets.

“For each market, specific strategies are being used to increase product uptake and usage, customer experience and ultimately revenue. We have further implemented a number of cost cutting initiatives managing to reduce our operating costs by 16 percent for the half year compared to same period last year,” Harry said.

Harry said focus areas have included tightly managing procurement to remove dealing with middlemen and requesting discounts of up to 20 percent from their suppliers.

“We have also moved out of rented premises in most instances,” she said.

She said TelOne was also confident that with the network modernization project that it’s embarking on, through which a number of exciting VAS services will be made available to customers.

“This, together with the continuous improvement in our customers’ experience, will not just keep the company afloat but rather take it to greater heights in the medium term.”

TelOne’s first half earnings before interest, taxes, depreciation and amortization (EBITDA) was $7m, two percent above prior year while collections from debtors were $76m, which was 12 percent above prior year.