Despite having been one of the companies enabling connectivity throughout lockdown, Telecom Namibia is still reeling from the effects of the pandemic and the resulting “slow turnaround in the supply chain”.
This was revealed by the company’s Chief Executive Officer Stanley Shanapinda in a recent interview with The Villager.
Asked how the current general economic slowdown has influenced the company’s business, Shanapinda said: “The impact on our business is mainly felt in the slow turnaround in the supply chain, following Covid-19”.
According to the CEO, the pandemic also affected the buying power of customers, while shrinking the company’s customer base, due to job cuts and salary cuts in certain industries.
“Telecom Namibia has customers across various segments such as households, SMEs, retail, corporates, government and wholesale. With the economic challenges and Covid-19, all these segments were affected as many businesses, households and government offices witnessed a decline in revenue and cash flow, leading to retrenchments and unemployment,” Shanapinda explained.
“As such, this reduced the buying power of our customer base, subscription of new clients and the ability of customers to pay for our services timely. We have witnessed service cancellations due to affordability or due to unpaid accounts,” he added.
Consequently, Telecom Namibia’s headline earnings took a nosedive as the negative impact of Covid-19 was felt across the various revenue streams in the year ended September 2020, with turnover plummeting by 6% during the period under review.
The following year the Group’s turnover contracted by 2% year on year due to “continuous pressure on the fixed voice and data revenue and the loss in directory income due to delays with the tender”.
For the year ended 30 September 2022, however, the Group saw an increase in profit of N$48 million (2021: 35 million) and the company a profit of N$33 million (2021: N$1 million).
“Revenue was however still under pressure with the focus on cost optimisation and maximising returns on the balance sheet,” Shanapinda explained.
“The Covid-19 pandemic provided challenges is the ways we worked and conducted business. It also presented opportunities for growth, as more people worked and studied from home and needed fast and reliable connectivity,” he noted.
“During the announcement of the state of emergency, and several lockdowns Telecom Namibia services were declared essential services and our employees could provide services where it was required,” he added.
Despite the uncertain trading environment made worse by the effects of Covid-19, Shanapinda said their focused and disciplined allocation of financial resources within a structured financial framework enabled the company to weather the impact of the COVID-19 storm.
In the period 2020-2022, the CEO said the Telecom Namibia Group spent N$661 million in capital expenditure (capex).
He said capex was utilised to establish a new omni-channel customer contact centre, land the Google Equino cable in the seaside town of Swakopmund, strengthen network and other supporting infrastructures as well as to enhance capacity to provide better customer experience.
In fixed line businesses, capex spent was allocated for fibre-based access and backbone infrastructures development, and for other projects such as 2G/3G/4G rollout. Moreover, capex was absorbed for further improvement of 4G network quality and capacity, readying for 5G rollout as well as enhancement of IT systems.
Shanapinda further said the telecommunications giant will invest over N$2.3 billion in the next five plus years to modernise its national network both fixed and mobile, starting from its national backbone to the core network and the access technologies.
“Close to 50% of the capital investments will be from own cash flow and the rest will be sourced from the market through capital rising,” he explained.
The capex is consistentwith the company’s ambitious Integrated Strategic Business Plan, or ISBP 2027, whose execution started last year.
“In line with its strategic intent guided by its ISBP 2027, Telecom Namibia will continue looking at different products and services that customers want. We will be looking at entertainment and streaming services with our service offerings in the short-medium-long-term that are in line with telecommunication global trends, gearing up for 4IR. Telecom Namibia will focus on simplified and environmentally friendly ICT service offering,” the CEO expounded.
He said Telecom Namibia wants to simplify the way it provides services and put more self-help tools in the hands of customers.
“We are looking at installing services faster and addressing faults within seven days. We aim to modernise our network to get an international digital transformation rating of over 3.5,” he said.
Shanapinda added: “Our new billing and fixed mobile converged core systems, that we are looking at implementing this year, will resolve issues experienced with suspensions and reconnections – as customers can be reconnected automatically upon making payment. We are aiming to get 5G ready.”
He said Telecom Namibia relies on a skilled work force to roll-out services in country and outside the borders of Namibia. “As such, the company is rolling out a change management strategy to bring employees on board to be part of the dynamic changes,” he indicated.
The CEO said one of the key challenges the company is facing is the ability to keep modernising its network to meet capacity demand at reasonable cost to customers.
“Namibia’s sparse population, uneven income distribution and geographical size present challenges in terms of infrastructure capitalisation, thus Telecom Namibia relies on the regional traffics to ensure financial sustainability of its network,” Shanapinda concluded.