Doom hanging over the head of debt-stricken Net1
Employees take turns to defraud the telecoms giant
State-owned mobile network operator, NetOne, is technically insolvent and runs the risk of being unable to continue operating.
According to the latest report by acting Auditor-General (AG) Rheah Kujinga, NetOne’s total liabilities exceeded the total assets by ZWL$32 billion in 2022. She said:
The company’s total liabilities exceeded the total assets by ZWL$32 billion, while the current liabilities exceeded the current assets by ZWL$20,9 billion (2021: ZWL$20,5 billion).Feedback
These conditions indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. My opinion was not modified in respect of this matter.
When a company’s ability to continue as a going concern is uncertain, it means there are significant uncertainties about the company’s future viability and its ability to continue operating for the foreseeable future, typically the next 12 months.
This indicates that the company may not be able to realise its assets and discharge its liabilities in the normal course of business.
Kujinga said the firm’s liabilities exceeding assets caused it to post a loss of ZWL$40 billion for the financial year ended December 31, 2022, widening its loss-making position from ZWL$31 billion. She said:
The company’s control over debt management was not effective during the period under review.
Post-paid customer accounts with outstanding balances were not suspended 90 days after barring of outgoing calls.
This was contrary to the company’s debt management policy, which requires suspension of services 90 days after barring of outgoing calls.
According to the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), in the first quarter of 2024, NetOne recorded a 5.52% dip in active subscribers to 4 017 167 from the previous quarter.
NetOne’s market share contracted by 6,66 percentage points to 11,84% in the first quarter from the fourth of last year.
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