NetOne, a key telecommunications firm in the nation, has been declared technically insolvent, sparking worries about its operational viability, as revealed by a recent report.
Last Friday, acting Auditor-General Rheah Kujinga disclosed that as of 2022, NetOne’s total liabilities surpassed its total assets by ZWL$32 billion. The firm’s current liabilities exceeded current assets by ZWL$20.9 billion, an increase from ZWL$20.5 billion in 2021.
Kujinga remarked that these conditions create significant doubt about NetOne’s capacity to continue operating, although her opinion on the financial statements was not modified because of this issue.
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The audit indicates that NetOne may struggle to fulfill its obligations and sustain its operations moving forward. This is exacerbated by a 5.52% decline in active subscribers, dropping to 4,017,167 in the first quarter of 2024, which reduced the company’s market share by 6.66 percentage points to 11.84%.
Kujinga pointed to poor debt management as a critical issue for NetOne, noting that the company did not suspend post-paid accounts with outstanding balances 90 days after barring outgoing calls, contrary to its policy.
Additionally, the report criticized NetOne’s financial reporting, noting the company failed to revise prior year financial statements per International Accounting Standard (IAS) 8, resulting in a modified opinion for the current year’s financials due to potential residual effects of non-compliance with IAS 21 on foreign exchange rates. This impacted the comparability of figures between the current and previous years.
In light of the audit, NetOne has pledged to rectify the unaccounted cash deposits and enhance its software to better track performance and data.
The findings raise serious concerns about NetOne’s financial health and its ability to continue operating, highlighting the urgent need for the company to address the identified issues.
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