Mozambique’s Transport and Communications Minister Mateus Magala has told the country’s parliament, the Assembly of the Republic, that the telecommunications company, TMcel, is a financial mess, owing debtors as much as $400 million and counting.
“The company carries a high cumulative overall debt of over $400 million with a worsening trend. TMcel is rapidly losing its market share. Its revenue is in progressive decline, it operates in a highly competitive environment, with a progressively deteriorating reputation and customer perception of the brand,” said Magala.
Magala thought that it had to do with TMcel using an outdated platform, raising its operational and maintenance costs.
TMcel’s situation is far more complex that LAM’s, Mozambique’s flag carrier, which entered into a management concession agreement with South Africa’s Fly Modern Ark, which is expected to submit it’s first report this May.
Magala said that the thinking is that TMcel should sell at least 80 percent of its shares, and for government to take up all the debt and lay off close to 60 percent of its workforce.
What Minister Magala did not touch upon are years of mismanagement in both companies.
Both LAM and TMcel have been used as slush funds by the ruling Frelimo party and sectors linked to the party. With regards to TMcel, this was exacerbated by the fact that the various managers who were appointed to run the company did not have the wherewithal to say no to demands for money to fund the party’s operations.
As for LAM, Frelimo always used the company to fly its members of high note without paying for the tickets issued. Thus, transferring the costs to the average citizen who can afford the high prices it charges to fly to the various destinations within Mozambique.
Ultimately, Frelimo loses two slush funds, but there are still many publicly-owned entities to continue funding its political operations.
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