HARARE – NetOne Private Limited, a leading telecommunications company in Zimbabwe, has been identified as technically insolvent, posing a significant risk to its operational sustainability, according to a recent report by acting Auditor-General Rheah Kujinga.
The report highlights severe financial distress with NetOne’s liabilities exceeding its assets by ZWL$32 billion as of 2022.
Acting Auditor-General Kujinga disclosed that NetOne’s total liabilities have outstripped its total assets by a substantial ZWL$32 billion. Specifically, the company’s current liabilities exceed its current assets by ZWL$20.9 billion, an increase from ZWL$20.5 billion in 2021. “These conditions indicate significant uncertainty about NetOne’s ability to continue operating as a going concern,” Kujinga emphasized.
Compounding the financial challenges, NetOne has also seen a downturn in its active subscriber base, which decreased by 5.52% in the first quarter of 2024, leaving the company with 4,017,167 subscribers. The company’s market share plummeted by 6.66 percentage points, falling to 11.84% within the same period.
NetOne’s financial woes deepened with a staggering loss of ZWL$40 billion reported for the fiscal year ending December 31, 2022, up from a ZWL$31 billion loss the previous year. The auditor attributed a portion of these difficulties to ineffective debt management practices, noting significant discrepancies in the handling of post-paid customer accounts with outstanding balances.
The report also flagged issues related to forex conversions used in financial reporting, which affected the accuracy and comparability of NetOne’s financial statements between 2021 and 2022. Despite these challenges, Kujinga clarified that the non-compliance with International Accounting Standards was significant but not pervasive to the financial statements.
In response to the audit findings, NetOne has committed to addressing unaccounted cash deposits and upgrading its software systems to improve performance monitoring and data management capabilities. These efforts aim to mitigate financial vulnerabilities and ensure compliance with regulatory standards moving forward.
A spokesperson for NetOne stated, “We acknowledge the challenges highlighted in the Auditor-General’s report and are taking decisive steps to address them. Our focus is on improving our financial management practices and enhancing operational efficiencies to restore confidence and stability in our business.”
The Auditor-General’s report underscores the urgent need for NetOne to implement robust financial and operational reforms. As the company navigates these turbulent times, the telecommunications sector and its stakeholders will be closely monitoring its efforts to stabilize and regain market position.
NetOne’s financial health and ability to sustain operations remain critical concerns, with the company’s future hinging on the successful implementation of its corrective measures. The coming months will be pivotal as NetOne works to reverse its fortunes and secure its place in Zimbabwe’s competitive telecommunications market.
