AFRICA UNIVERSITY
(A United Methodist-Related Institution)
CAUSES OF TELECOMMUNICATIONS COMPANIES’ REVENUE DECLINE
IN ZIMBABWE: A CASE OF TEL-ONE MUTARE BRANCH
BY
SHEPHERD MANGWEKA
A RESEARCH PROJECT SUBMITTED TO AFRICA UNIVERSITY IN
PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF
BACHELOR OF ACCOUNTING (HONOURS) IN THE COLLEGE OF
BUSINESS, PEACE, LEADERSHIP AND GOVERNANCE
DEPARTMENT OF BUSINESS SCIENCES
2020
Abstract
The research analyzed the sources of revenue and the causes and effects of revenue
decline in telecommunications companies in Zimbabwe: A case of TelOne Mutare
Branch. The research was prompted by the evident decline in revenue inflows in most
of the TelOne Branches in Zimbabwe as the traditional sources of revenue have gone
dry and this has heavily impacted on their performance. To achieve the objectives of
the study, literature sources were reviewed and both secondary and primary sources
were employed to obtain data on the subject under study. The study highlighted and
analyzed the various views of other authors on the sources of revenue for
telecommunications companies, and the causes and effects of revenue decline in
telecommunications companies. The study also presented empirical evidence and
global experiences in terms of revenue collection. The research targeted the population
consisting of members of the Management Team, Banking Hall Tellers, Workers
Committee and Resident and Stakeholders' Association. A sample size of 35
participants was chosen for the study through judgmental and simple random
sampling. The findings of the research were presented in the forms of tables, pie charts
and graphs. Data analysis revealed that TelOne Mutare Branch was performing poorly
in terms of service delivery due to decline in revenue inflows and identified the causes
of revenue decline as attributed to poor billing system, political influence, economic
challenges, corruption and resistance of customers in paying bills. The effects of
revenue decline were established as the decline in service delivery, garnishing
telecommunication accounts, downsizing and late payment of salaries and allowances
to its employees thus affecting the performance of the organization as a whole. The
study concluded that TelOne Mutare Branch has a long way to go in getting back its
title as the 'Number One Telecommunication Company', by ensuring that there is
effective and efficient service delivery and this can only be achieved if there is a sound
revenue base to support all its activities. The study recommended that strategies should
be put in place to avert corruption, encourage customers to pay bills and to source other
avenues which can boost the revenue base of the telecommunication company.
Keywords: Revenue, Revenue Collection, Credit Control, Financial Performance and
Service Delivery.
Declaration
This research project is my original work except where sources have been
acknowledged. The work has never been submitted, nor will it be ever be, to another
University in the awarding of a degree. I have made it independently with the close
advice and guidance of my supervisor.
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STUDENT
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SUPERVISOR
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DATE
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DATE
Copyright
All rights reserved. No part of this research project may be reproduced, stored in any
retrieval system, or transmitted in any form or by any means, electronic, mechanical,
photocopying, or recording or otherwise from scholarly purpose, without the prior
written permission of the author or of Africa University on behalf the author.
Acknowledgments
I wish to acknowledge the assistance I received from the following people whose
efforts made this research possible:
My supervisor, Mr L. Ngendakumana who continuously offered guidance from
designing the research up to the compilation of the final report and frequently
communicated the improvement points that had to be considered in order to add value
to this research. This small piece of appreciation cannot fully convey my heartfelt
gratitude towards him. I would like to acknowledge my brother Sydney Mangweka for
the support he offered in developing this research. I would also like to thank my friends
for proof reading this project and many others who supported me in a way which may
be difficult to pencil. Special thanks to the research subjects who found time to
participate in the study and for being very understanding when I kept pestering them
for responses. Finally, I acknowledge the contributions of my family who gave me
total support and encouragement towards my quest to obtain a Degree in the
Accounting field, may Lord Almighty bless you all.
Dedication
This study is dedicated to my family members especially my mother Oripah
Mangweka for her constant encouragement and patience throughout my academic
struggle and my father Samuel Mangweka for his continuous financial support thus
realizing my long cherished dream. And finally, to the late Dr Steven Chuchu who
contributed a lot to my knowledge of revenue.
List of acronyms
Acronym
Meaning
ARPU
Average Revenue Per User
ADSL
Asymmetrical Digital Subscriber Line
FTTH
Fibre To-The Home
OTT
Over-the-Top
ICT
Information Communication Technology
POTRAZ
Postal and Telecommunication Regulatory Authority of
Zimbabwe
ROA
Return on Assets
PTC
Posts and Telecommunications Corporations
ISP
Internet Service Provider
EASSy
Eastern African Submarine System
VoIP
Voice Over Internet Protocol
ZESA
Zimbabwe Electricity Supply Authority
US
United States
GSM
Global System for Mobile Communication
MB
Megabyte
WI-FI
Wireless Fidelity
WiMAX
Worldwide Interoperability for Microwave Access
NSSA
National Social Security Authority
ZIMRA
Zimbabwe Revenue Authority
Definitions of terms
Revenue: is the inflows of services potential and economic benefits received and
receivable by an organization that represents an improvement in net assets or the equity
other than increases relating to owners’ contributions. Fair value of the consideration
received may be the measurement of revenue.
Revenue Collection: is the general collection of revenue for debts owed or owed
revenue by persons or businesses. Revenue collection means collecting outstanding
financial obligations from the customers for goods or services delivered or used but
not yet paid for. A business has the right to receive revenue because it has delivered a
product or service- essentially the definition of revenue collections.
Credit Control: refers to methods and strategies adopted by a firm to ensure that they
maintain an optimal level of credit and its effective management.
Financial Performance: is the company's financial condition over a certain period
that includes the collection and use of funds measured by several indicators of capital
adequacy ratio, liquidity, leverage, solvency, and profitability. Financial performance
is the company's ability to manage and control its resources.
Service delivery: is the act of providing a service to customers by telecommunication
companies. There are a number of services provided by telecommunication companies
and these include voice and broadband services among others.
Table of Contents
CHAPTER 1 INTRODUCTION .............................................................................. 1
1.1 Introduction ........................................................................................................ 1
1.2 Background to the study ..................................................................................... 1
1.3 Statement of the Problem ................................................................................... 3
1.4 Aim of study ....................................................................................................... 4
1.5 Research Objectives ........................................................................................... 4
1.6 Research Questions ............................................................................................ 5
1.7 Research Assumptions ....................................................................................... 5
1.8 Significance of study .......................................................................................... 5
1.9 Delimitation of study .......................................................................................... 6
1.10 Limitations of the study.................................................................................... 6
1.11 Summary .......................................................................................................... 7
1.12 Outline of the rest of the research .................................................................... 8
CHAPTER 2 REVIEW OF RELATED LITERATURE ....................................... 9
2.1 Introduction ........................................................................................................ 9
2.2 Theoretical literature review .............................................................................. 9
2.2.1 Revenue ....................................................................................................... 9
2.2.3 Credit control ............................................................................................. 12
2.2.4 Financial performance ............................................................................... 13
2.2.5 Sources of revenue ..................................................................................... 15
2.2.6 Causes of Revenue Decline ....................................................................... 25
2.2.7 Strategies to Improve Revenue Generation in Telecommunication
Companies .......................................................................................................... 43
2.3 Empirical Evidence .......................................................................................... 48
2.3.1 Lessons from Global Experiences ............................................................. 52
2.3.2 Gaps in Literature ...................................................................................... 53
2.3.3 Summary .................................................................................................... 54
CHAPTER 3 RESEARCH METHODOLOGY .................................................... 56
3.1 Introduction ...................................................................................................... 56
3.2 Study Area ........................................................................................................ 56
3.3 Research design ................................................................................................ 56
3.4 Qualitative Research Design ............................................................................ 57
3.5 Quantitative research design ............................................................................ 57
3.6 Study Population and Sampling procedure ...................................................... 58
3.6.1 Target Population: ..................................................................................... 58
3.6.2 Sampling .................................................................................................... 59
3.6.3 Sample Size ............................................................................................... 60
3.6.4 Judgemental sampling ............................................................................... 61
3.6.5 Simple random sampling ........................................................................... 61
3.7 Inclusion/ exclusion criteria ............................................................................. 62
3.8 Primary Data .................................................................................................... 62
3.9 Secondary data ................................................................................................. 63
3.10 Data Collection Procedures ............................................................................ 64
3.11 Data Collection Instruments ........................................................................... 64
3.11.1 Research instruments ............................................................................... 64
3.11.2 The Questionnaire .................................................................................... 64
3.11.3 Interviews ................................................................................................ 66
3.12 Pretesting ........................................................................................................ 67
3.13 Validity ........................................................................................................... 68
3.14 Reliability ....................................................................................................... 68
3.15 Data Presentation and Analysis ...................................................................... 69
3.16 Ethical Considerations.................................................................................... 69
3.17 Summary ........................................................................................................ 70
CHAPTER 4 DATA PRESENTATION AND ANALYSIS ................................. 71
4.1 Introduction ...................................................................................................... 71
4.2 Data Collection Process ................................................................................... 71
4.3 Response Rate .................................................................................................. 72
4.3.1 Questionnaire Response Rate .................................................................... 72
4.3.2 Interview Response Rate ........................................................................... 74
4.4 Research Findings ............................................................................................ 75
4.4.1 Sex Demographics ..................................................................................... 75
4.4.2 Academic Qualification ............................................................................. 76
4.4.3 Work Experience for Members of Management ....................................... 77
4.5 Source of Revenue ........................................................................................... 78
4.6 Causes of Revenue Decline .............................................................................. 79
4.7 Effects of Revenue Decline on Employees ...................................................... 83
4.8 Effects of Revenue on the Organisation ........................................................... 85
4.9 Frequency of Payment of Bills by Consumers ................................................. 87
4.10 Alternative credit control techniques that would improve revenue collection88
4.11 Alternative credit control techniques that would reduce cost of revenue
collection ................................................................................................................ 89
4.12 Efforts Made by Residents So Far Towards Revenue Enhancement ............. 90
4.13 Policies in Place to Improve Revenue ............................................................ 90
4.14 How TelOne Mutare Has Gone in Improving Revenue Inflows ................... 91
4.15 Summary ........................................................................................................ 92
CHAPTER 5 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS .. 93
5.1 Introduction ...................................................................................................... 93
5.2 Discussion ........................................................................................................ 93
5.3 Conclusion ........................................................................................................ 95
5.4 Recommendations ............................................................................................ 97
5.4.1 Measures to avert corruption ..................................................................... 97
5.4.2 Improving the use of ICT and ensure customers pay their bills ................ 97
5.4.3 Entrepreneurship, Donor funds and central government assistance .......... 98
5.5 Suggestions for further research ....................................................................... 98
References ............................................................................................................... 100
List of tables
1.1
Revenue Performance Trend Analysis of TelOne Mutare Branch
4
3.1
Target Population size
59
3.2
Population sample
62
4.1
Questionnaire Response Rate
73
4.2
Interview Response Rate
74
4.3
Alternative credit control techniques that would improve revenue collection
88
4.4
Alternative credit control techniques that would reduce costs of revenue
collection
89
List of figures
4.1
Interview response rate
75
4.2
Academic Qualification
76
4.3
Work Experience for Members of Management
77
4.4
Sources of Revenue
78
4.5
Causes of Revenue Decline
80
4.6
Effects of Revenue Decline on Employees
84
4.7
Effects of Revenue Decline on the Organisation
85
4.8
Frequency of Payment of Bills by Consumers
87
Appendices
A
Informed Consent Guide
105
B
Research Questionnaire
107
C
Interview Guide
111
D
AUREC Approval Letter
112
E
TelOne Approval Letter
113
CHAPTER 1 INTRODUCTION
1.1 Introduction
This chapter outlines the background of the study, purpose of the study, statement of
the problem, objectives, research questions, and assumptions underlying the study,
significance of the study, limitations and delimitations of the study, the summary and
the outline of the rest of the chapters.
1.2 Background to the study
In a global competitive market, companies are always trying to improve their
profitability. A tool which has proven successful in order to achieve this goal with
relatively low technological investments has been the use of revenue management
systems.
Revenue collection is one of the most important functions of any organisation at any
level, but surprisingly it is one of the least written about subjects in the field of public
financial management. According to Allan (2003) the benefit of an efficiently run
revenue collection operation are significant to an improved revenue flow, greater
interest earnings on investments, improved cash management and more accurate cash
forecasting ability. Allan (2003) also states that the benefit of an efficient run revenue
collection operation is significant to greater budgetary control and ability to complete
projects in a timely fashion, consistent and equal treatment of clients, increased
compliance with local tax and revenue laws and improved creditworthiness and
reduction in borrowing costs.
World over the last few decades have witnessed the growing application of technology
in cash management. Of particular importance is the use of automated remittance
processors, which can greatly shorten the time it takes to process checks and remittance
advices, and other labour-saving technologies such as electronic funds transfer and
mobile money. Software systems that can be used with personal computers as well as
mainframes can perform a wide range of collection functions, including billing,
receipting, accounts receivable processing, and accounting.
The major goal of any organisation’ s revenue collection is to collect what is owed. In
the case of TelOne Zimbabwe, improving the collection of voice and broadband
revenues, increasing amount of cash available for investment by speeding collection
to telecommunication company’ s bank account and assuring accountability are related
objectives. According to Allan (2003) the ability of any organisation to raise revenue
is affected by credit control and revenue management techniques.
Organisation, by employing such technologies, can greatly improve the efficiency of
their revenue collection operations. The decision to employ new technology should be
based on the ability to reduce labor costs and improve the speed with which funds can
be processed, deposited, and earning interest.
According to Van Donk (2008:297), trends in the structure and performance of
parastatal revenues are closely connected to underlying debates on redistribution,
stabilisation and accountability. The inability of the most government parastatal to
collect a significant proportion of revenues that are due to them has been a perennial
concern of policy makers seeking to stabilise state parastatal finances. This problem
has been ascribed to many underlying issues including the inability of poor consumers
to pay for services just but to mention a few which destroyed the credibility of state
parastatal enforcement capacity, poor financial management practices including weak
administration of billing and collection system and inappropriate accounting treatment
of consumer debtors, which dramatically magnified revenue problems.
Moyo (2018) states that TelOne Zimbabwe revenues have been fluctuating since 2013
when the company recorded $152 million. The following year, revenue rose to $163
million and in 2014 it came down to $138 million, while in 2016, it came further down
to $120 million. In the last few years, TelOne’ s revenues particularly from voice
revenue are being adversely impacted by over-the-top (OTT) communication services
such as WhatsApp, Viber, Twitter and Facebook among the others.
A sound revenue system for TelOne is an essential condition for the success of
effective service delivery because no institution or entity can provide goods and
services to its stakeholders without having money available to cover operational costs.
If an entity such as TelOne does not have sustainable income, it cannot make service
commitments or even purchase goods and services.
The research analysed the sources of revenue and causes and effects of revenue decline
at TelOne Mutare Branch. The research was prompted by the evident decline in
revenue inflows in most of the TelOne Zimbabwe exchanges (branches) as the
traditional (voice revenue) sources of revenue have gone dry and this has heavily
impacted on the performance.
1.3 Statement of the Problem
TelOne Zimbabwe is experiencing an increased trend of sudden corporate failure in
both the nationally and regional context. Shareholders and stakeholders are
increasingly becoming more concerned of the financial performance of the
cooperation whose services are undergoing various constraints that include high level
of competition, poor marketing and advertising strategies, vandalism of
telecommunications equipment, lack of foreign currency, electricity blackouts and
poor management strategies among other issues. The study suggests that there is need
to determine optimal revenue collection techniques to ensure a health financial
performance of the firm. This study also suggest that firm should expand in a
controlled way with the aim of achieving an optimum size so as to enjoy economies
of scale which can ultimately result in higher level of financial performance. Revenue
collection forms the source of employee income, debt settling, and procurement of
assets. Without sound revenue collection strategies, TelOne faces imminent closure
and plummeting into financial collapse. It is against this backdrop that the study seeks
to examine the Causes of Telecommunications Companies’ Revenue Decline in
Zimbabwe making a case of TelOne Mutare Branch.
Table1.1: Revenue Performance Trend Analysis of TelOne Mutare Branch
Year
Revenue
Comment
2014
$16 057 099.04
Base year
2015
$8 164 816.73
Sharp decrease
2016
$6 907 857.93
Decrease
2017
$7 227 267.96
Slight increase
2018
$6 811 003.45
Decrease
Source: Company sales journal, TelOne, Mutare Branch 2019
1.4 Aim of study
The purpose of the study is to investigate the causes of revenue decline at TelOne
Mutare Branch.
1.5 Research Objectives
The following are the research objectives;
1. To assess the effects of revenue decline on the performance of TelOne Mutare
Branch.
2. To identify the sources of revenue for TelOne Mutare Branch.
3. To come up with the possible solutions to resuscitate the revenue base at
TelOne Mutare Branch.
1.6 Research Questions
1. What are the effects of revenue decline on the performance of TelOne Mutare
Branch?
2. What are the main sources of revenue for TelOne Mutare Branch?
3. What can be done by TelOne Mutare Branch to improve on their revenue
collection?
1.7 Research Assumptions
This study was conducted based on the following assumptions:
The research participants shall answer the questions truthfully, to the best of
their knowledge.
Company managers, bank tellers, workers’ committee and resident and
stakeholders’ association have adequate knowledge of all matters of revenue
to respond to the questions.
1.8 Significance of study
The research will be of importance and advantageous to:
The student
The student will acquire skills and knowledge on how to analyse and manage revenue
operations through interacting with TelOne Mutare Branch staff and other
stakeholders. The student will also have an opportunity to develop and contribute
possible strategies needed to improve revenue collection at TelOne Mutare Brach.
Africa University
The study will be used by other students as a reference material for their studies. The
study will assist the Department of Business in integrating current information
surrounding revenue issues so as to come up with possible solutions to various
problems concerning revenue.
TelOne Mutare Branch
The findings of this research will assist TelOne Mutare Branch Management to come
up with necessary strategies to improve the revenue of the company based on
challenges and opportunities they face in the collection of revenue. The research will
result in creation of financially viable telecommunication company and thus, they will
be able to deliver services effectively and efficiently to their stakeholders of Mutare
and ensure that the available manpower is well catered for in terms of salaries and
allowances so that they can execute their duties and achieve the objectives of the
organisation.
1.9 Delimitation of study
TelOne Mutare Branch will be used as a case study. The focus of study is on revenue
at TelOne Mutare Branch, its challenges and opportunities and suggests ways of
improving the revenue collection for the period 2019 to 2020. The research is also
limited to employees, management, residential clients and stakeholders of TelOne
Mutare Branch.
1.10 Limitations of the study
The researcher of this study faced a number of limitations when conducting this study.
These limitations are:
Financial and budgetary constraints, this limitation was due to the fact that the
researcher was self-sponsored and the process of conducting research required a lot of
financial resources to carry out various activities, such as to develop and distribute
questionnaires for respondents and other stationary services which are more expensive
as compared to researcher’ s ability to afford them effectively. Also, another obstacle
of the study was the tight schedule of the respondents who are TelOne’ s official.
In additional, managers may not be willing or able to disclose all the relevant
information about their company’ s revenue and the strategies that have been
implemented due to constrains pertaining to confidentiality rules and regulations
covering management’ s code of conduct. To overcome this limitation, managers were
assured that the gathered information was to be used only for academic purposes of
the research and will not be disclosed to any other part without their consent.
1.11 Summary
In this chapter the researcher introduced the topic under study with regards to causes
of revenue decline at TelOne Mutare Branch. The chapter highlighted the critical
elements that prompted the researcher to conduct such a study through the background
of the study. It discussed the statement of the problem, significance of the study,
research objectives and questions, definition of terms, delimitations and limitations.
The following chapter focuses on the literature of various authors with regards to
Causes of Telecommunication Companies’ Revenue Decline in Zimbabwe: A case of
Tel-One Mutare Branch.
1.12 Outline of the rest of the research
Chapter two zones in on the literature related to the Causes of Telecommunication
Companies’ Revenue Decline in Zimbabwe: A case of Tel-One Mutare Branch.
Chapter three discusses the research methodology used in this research, the method of
sample selection, sample size as well as the research instruments used to collect the
data on which to base the research conclusion.
Chapter four will explore the data presentation methods, the discussion and the
interpretation of findings from the study. Chapter five discusses the summarized
findings of the study and gives conclusions and recommendations on the Causes of
Telecommunication Companies’ Revenue Decline in Zimbabwe: A case of Tel-One
Mutare Branch.
CHAPTER 2 REVIEW OF RELATED LITERATURE
2.1 Introduction
The main purpose of literature review is to help the researcher to develop a good
understanding and insight into relevant previous researchers and the trends that have
emerged. In order to come up with a clear understanding of this study, the researcher
finds it necessary to review the literature from other others and researchers. Saunders
et al (2009) outlined that reviewing the literature critically will provide the foundation
on which one’ s research is built.
2.2 Theoretical literature review
2.2.1 Revenue
Muller and Berger (2010) cited the International Public Sector Accounting Standard
(IPSAS) paragraph 12 defining revenue as the gross inflows of services potential and
economic benefits received and receivable by an organisation, that represents an
improvement in net assets or the equity other than increases relating to owners’
contributions. Fair value of the consideration received or receivable may be the
measurement of revenue.
TelOne Zimbabwe Integrated Annual Report (2015), states that revenue is from the
provision of telecommunication services, rental, sale and repair of telecommunication
equipment. It also states that revenue is recognized when it is probable that future
economic benefits will flow to the entity and these benefits can be measured reliably.
The revenue is recognized for sale of goods, rendering of services and use by others
of the entity’ s assets. More so, revenue is measured at the fair value of consideration
received or receivable.
2.2.2 Revenue collection
There are several revenue collection challenges faced by many countries such as
Tanzania. Ilala District Tanzania Telecommunication Corporation (TTC formerly
known as Tanzania Telecommunication Company Limited – TTCL) encountered
challenges in providing services to the people (Mbufu, 2013). This was as a result of
low revenue collection and as a result of the evasion by the clients to clear the bills
due. Proceeds from interest on overdue accounts, sale of consumer premises
equipment (ADSL and FTTH modems, router and handsets) and rental fees were also
diminishing significantly and were failing to offer the necessary sources to the public.
This was shown by the various different financial budgets for the past three years,
which means that the forecasted expenses were more than the forecasted profits
therefore it was a deterrent to effective service provision. Many telecommunications
companies in Tanzania have improved their revenue collection schemes in recent
years; these caused an increase in revenue collection (Mbufu, 2013).
According to Information and Communication Technology (2012), the Telkom
communication company in South Africa introduced the debt and credit control policy.
The purpose of the policy was to cater for the nation enabling continuous provision of
services, collection of debtor’ s accounts reports sent should be realised within a range
of thirty days. The credit regulator’ s role of the Telkom communications company was
subdivided into cut-offs reconnections, legal functions, payment demands and
arrangements. Cut-off duties included services restraints; follow ups on non-payments,
low consumption cases and no deposits. On the other purpose of revenue collection
was strict supervision and reimbursements on accounts closed. More so, revenue
collection roles included the distributing of notification letters, provisions, litigations,
telephone tracking and handovers. The annexure of the Telkom communication
company further stated that revenue collection procedures are done with active notices
and cautions. Accounts reports are viewed as notice of the debts to the customers and
highlighting the purpose of revenue collection procedures.
Looking at the situation in Zimbabwe, since the high inflation period of 2000 to 2008,
Telecommunications Companies (TelOne branches) were encountering serious
problems in collection of revenue from other stakeholders and residents (Garaiza,
2014). Introduction of a multiple legal tender in 2009 had no effect on ailing the
organisations as there were persistent problems in revenue collection. After
successions of telecommunications community (TelOne Zimbabwe Community)
upheavals about poor provision of services in many cities, the Information Technology
and Services Courier minister employs his influences to resuscitate TelOne branches
in towns such as Bindura, Chinhoyi, Mutare and Redcliff. On the other hand, the
liquidity situation and debtor’ s ratio did not progress in these towns therefore there
was need to find new openings to enhance revenue collection in telecommunications
companies.
Garaiza further suggested in the study that, timeous invoicing, improved work ethics,
recruitment of knowledge experienced employees, and sufficient contact with the
customers and enhanced collection of revenue procedures that will assist the
telecommunications companies to improve its collection of income. In addition, the
scholar learnt that although all classes of debtors are ailing to settle their arrears earlier,
low income earners whom are also jobless usually are affected with this challenge of
unsettled debts and they are mostly found in high density suburbs.
However, nobody had studies on the causes of Telecommunication Companies’
Revenue Decline in Zimbabwe: A case of TelOne Mutare Branch.
2.2.3 Credit control
Credit control is one of the most important activities in any company and cannot be
overlooked by any economic enterprise engaged in credit irrespective of its business
nature. It is the process to ensure that customers will pay for the products delivered or
the services rendered. Meyers and Brealey (2003) describes credit control as methods
and strategies adopted by a firm to ensure that they maintain an optimal level of credit
and its effective management.
It is a facet of monetary management involving credit analysis, credit rating, credit
classification and credit reporting. Nelson (2002) views credit management as merely
the means by which an entity manages its credit sales. It is a requirement for any entity
addressing credit transactions since it is not possible to possess a zero credit or default
risk. The higher the amount of accounts receivables and their age, the higher the
finance costs incurred to take care of them. If these receivables are not collectible on
time and urgent cash needs rise, a firm may result in borrowing and the opportunity
cost is the interest expense paid.
Nzotta (2004) opined that credit control greatly influences the success or failure of
telecommunication institutions and other financial institutions. This is because the
failure of billing deposits is influenced to a large extent by the quality of credit
decisions and thus the quality of the risky assets. He further notes that, credit control
provides a leading indicator of the quality of billing deposit credit portfolio. A key
requirement for effective credit control is the ability to intelligently and efficiently
manage customer credit lines. So as to minimize exposure to bad debt, over-reserving
and bankruptcies, companies must have greater insight into customer financial
strength, credit score history and changing payment patterns (Lameck, 2013).
Credit control starts with the sale and does not stop until the full and final payment has
been received. It is as vital as part of the deal as closing the sale. In fact, a sale is
technically not a sale till the cash has been collected (Garaiza, 2014). It follows that
principles of goods lending shall be concerned with ensuring, so far as possible that
the borrower will be able to create scheduled payments with interest in full and within
the required time period otherwise, to profit from an interest earned is reduced or even
wiped out by the bad debt when the customer eventually defaults. Credit control is
concerned primarily with managing debtors and financing debts (Bird, 2018). The
objectives of credit control can be stated as safe guarding the companies’ investments
in debtors and optimizing operational cash flows. Policies and procedures must be
applied for granting credit customers, collecting payment and limiting the risk of nonpayments (Moti, 2012).
2.2.4 Financial performance
Bhunia (2011) stated that financial performance means an entity’ s general stability of
finance in a specified period of time. The investor words dictionary also added that
financial performance is the performance level of a business over a given period of
time articulated in the sense of overall losses and profits incurred during that period.
Analysing financial health of an entity permits the makers of decisions to evaluate the
yields of business approaches and events in monetary terms.
Financial performance is a subjective measure of how well an organisation employs
its primary assets to generate revenue for the organisation. The term can also be
referred as a broad measure of an organisations overall financial health over a
predetermined period of time (Murerwa, 2015). Financial performance also refers to
the processes of using various financial instruments to measure performance or
profitability of the organisation. Financial performance indicates the financial health
of a firm in a given period of time. Financial performance may be used to relate or
differentiate firms with similar characteristics or to evaluate sectors or industries in
total to enable an entity to decide on how well to enhance the existing circumstances
or carry on a wanted arrangement (Haque, 2014).
To appraise a firm’ s performance, business entities normally apply financial ratios
since they provide a simplified description of the entities current financial state in
contrast to previous accounting period and they provide clues on how a firm’ s
management can improve performance (Jha & Hui, 2012). Managers of various firms
use financial ratios to carry out quantitative and in-depth analysis of the firm’ s
financial statements. Analysis of financial ratios by managers helps to determine
whether organisational goals and objectives are being achieved, hence financial ratios
also serve as a control to and help the management formulate future strategies. Ratio
analysis entails the relative measures of an organisation performance in financial terms
and provides clues on the financial state of the company (Wei, 2012).
Chartered Institute of Management Accountants (CIMA) states that the procedure of
evaluating the efficiency with which a reporting entity do well is by the acquiring of
economic resources and their effective and efficient distribution in attaining its set
goals. Performance procedures can be based on financial and non-financial
information. CIMA (2015) adds that measures of financial performance are the
procedure of improving assessable pointers that can be thoroughly traced to evaluate
the progress made in attaining pre-set targets and using such pointers to evaluate
improvement in attaining these set targets. The pointers of financial performance of an
entity include liquidity, profitability, solvency and many others.
Financial performance in the telecommunication industry can be evaluated using
proxies like profitability, return on equity, liquidity and interest coverage ratio (Njiiri,
2015). The return on investment indicates the amount of profit a telecommunication
company is generating from its investments which are financed by shareholders and
other investors while the interest coverage ratio depicts the ease with a
telecommunication company can pay interest on outstanding debt (Haque, 2014). The
Return on assets (ROA) is the mostly used comprehensive measurement of overall
performance by telecommunication institutions on the accounting viewpoint. (Jha &
Hui, 2012). Therefore, the ROA will be employed to measure financial performance.
CIMA (2015) outline the following advantages and disadvantages of financial
performance measures. The first advantage is that, there is improved control and
making of decisions. Good understanding of entity’ s performance makes it possible to
make correct decisions. When all support in decisions can be improved at all levels of
the firm that refers to multidimensional measurement of performance. In addition,
there is accountability as an advantage. An important tool to attain accountability at
institutional and employee level in order to influence decision makers is measuring
financial performance. However, the disadvantage is that there is a constraint in
obtaining success drivers such as invention or rigidity which result in a temptation to
avoid them (Muller, T., & Werterg, j., 2011).
2.2.5 Sources of revenue
Revenue is from the provision of telecommunication services, rental, sale and repair
of telecommunication equipment, investments and government grants. According to
TelOne Private Limited Sustainability Report (2017), the company provides the
following services:
Fixed broadband solutions through Fibre, ADSL and Satellite; Leased internet; Virtual
private networks, Point to point data connections; Data Centre and Cloud Computing
Services; Customised internet bandwidth solutions; Backhaul services; Internet
broadband wholesale; Interconnection services; Public Wi-Fi; and Voice.
a. Fixed-Broadband Internet
Internet services were first introduced in Zimbabwe for academic purposes in 1991.
Commercial service providers were gradually introduced using leased lines through
South Africa. In 1997, the PTC launched an Internet hub connecting directly to the
USA (Easton, 2018). The national internet backbone was upgraded to 2Mb/s in 1998
and expanded to 11Mb/s by 2003. Subsequently, there has been consolidation in the
internet service provider (ISP) market with larger ISPs buying smaller ones to
strengthen their positions in an increasingly competitive operating environment. The
main service providers in the ISP market are M-Web (part of the South African based
MIH Group), Zimbabwe Online, Africa Online, ComOne (operated by TelOne), and
Ecoweb (part of the Econet Wireless Group). There are also a significant number of
smaller ISPs based in Harare, Mutare, and Bulawayo (Adaramba, 2020).
Measuring internet use in Africa is highly speculative, but estimates suggest that by
the end of 2007 more than half of the 50 million users were in North Africa and South
Africa (Ndiringepi, 2009). In Zimbabwe, available statistics suggest the country had
about 1,422,000 internet users in 2009, compared with only 50,000 in 2000 (Paul,
2009). This gives an internet penetration of 11.9 percent and would make internet
penetration higher than mobile penetration for comparable time periods (Paul, 2009).
The estimate for internet users in Zimbabwe is higher than that given for other
countries such as Zambia, Tanzania, and Uganda, which have experienced significant
mobile growth rates (Ndiringepi, 2009). The explanation for this is not clear, but it
could be that in the absence of access to mobile telephony, people used internet
through cybercafés as an alternative communication channel, particularly when
communicating with the Zimbabwean Diaspora (Ndiringepi, 2009).
The major impediment to internet usage in many developing countries, and in
Zimbabwe, is cost. Because of the scarcity of broadband, most internet access is dialup, and most countries charge for dial-up at convectional voice calling rates. A
monthly usage of 20 hours of internet access costs about $USD120 in Zimbabwe,
almost thrice as much as the next most expensive region, in the Americas (Madrina,
2009).
The number of personal computers per 100 people has risen from 1.5 per 100 in 2000
to 6.5 per 100 in 2007. This is higher than the average of 1.8 per 100 for Sub-Saharan
Africa (Easton, 2018). This may have a correlation with the higher levels of literacy in
the country and may be a good sign of adoption readiness, should other inhibiting
conditions be addressed (Ranganai, 2019).
In recent years, there has been substantial progress in providing the eastern Africa
seaboard with access to the international submarine cable network (Nhowe, 2020). The
Southern Africa Telecommunications Association (SATA) Backhaul links project is
closely linked to the Eastern African Submarine System (EASSy) project which entails
the development of an optical fibre submarine cable network with onshore landing
points at strategic locations along the entire eastern seaboard. It will cover a distance
of 9,900 km running from Mtunzini in South Africa to Port Sudan (Nhowe, 2020). A
complete broadband connectivity system entails, on top of a submarine cable, the
development of a backhaul transmission system/network through which landlocked
countries will access the sea cable via landing stations (OECD., 2017) The backhaul
networks are crucial to the achievement of the overall development objectives because
they would bring to EASSy Project a backup route, allowing traffic to be rerouted in
most of the cable cut cases, and enabling connectivity of land-locked countries, they
would ensure the existence of sufficient overall accessible market demand to sustain
the subsea cable investment (Easton, 2018).
Within Zimbabwe, connectivity to the regional fibre optic network is quite limited at
this time, as is the existing domestic backbone network. As a result, the development
of broadband internet services is constrained. Mobile operators do not require highcapacity backbone networks to carry voice traffic and have developed their own using
wireless technologies (Nhowe, 2020). Cross border backbone connections in
Zimbabwe include the Mozambique connection operated by Econet, which is fully
functional and the Harare to Zambia connection (Nhowe, 2020). The latter has a very
low capacity and cannot be used to carry simultaneously voice and data traffic. An
upgrade will be needed for this connection if Zimbabwe desires to have a high capacity
backbone into the country (Nhowe, 2020).
b. Voice service
The telecom companies in Nigeria lost N25.92bn voice calls revenue in 2017 due to
decline in number of subscribers in the country (Adaramba, 2020). Daily Trust
findings have shown. MTN, GLO, Airtel, 9mobile and other small operators witnessed
a sharp drop in the number of telecoms subscribers from 155 million in January to
140.7 million by December, figures from the Nigerian Communications Commission
(NCC) show. An average Nigerian telephone user spends an average of N1,440 for
voice calls every month, but some spend far more than that. If N1,440 is multiplied by
15 million people and it gives N2.2bn and if that is further multiplied by 12, it gives
N25.92bn (Adaramba, 2020).
The Association of Licensed Telecommunications Operators of Nigeria (ALTON) said
the decrease revenue of their members due to decline in subscriber’ s base, increase
operating cost and intrusion of Over The Top (OTT) services is of great concern to its
members. ALTON’ s chairman, Engr Gbenga Adebayo, said increasing usage of OTT
services by customers is adversely impacting on traditional telecoms platforms.
He quoted Ovum, the independent analyst and consultancy as saying the growing
adoption of OTT services by customers instead of traditional telecoms services (voice
services) will cause global revenue loss of $386bn over a period of seven years (20122019) for the traditional telecom operators, thus endangering network development.
In Nigeria, Daily Trust investigations showed that voice minutes have decline due to
impact of OTT. Many subscribers who are on WhatsApp now make voice for free,
using the OTT network. The increasing adoption of OTT applications by telecom
subscribers is also negatively impacting on incoming international traffic as well as
SMS at huge cost to the telecoms’ revenue, he added.
TelOne provides voice telephone services (Karakandai, 2015). This is the plain
telephone system which is used by both individual and business customers. With its
voice facility TelOne ensures crystal sound, continual connectivity, and unlimited talk
time (Nhowe, 2020). These are also the wireless voice services that come with internet
facility, mobility and texting facility. The voice comes with other additional services
that include: Conference calling, call waiting, call transfer, call forwarding, and speed
dialling and hotline services. Revenue includes installation fees for first time service,
monthly rentals and usage charges. The service can be prepaid or post-paid. For the
post-paid service billing is done monthly and revenue is recognised when the client is
billed in the month of consumption (Karakandai, 2015). For the prepaid service,
revenue is based on usage or upon expiration of the usage period. According to
Leonard Sengere (2018) in articled titled, “ TechZim” , revenue from voice traffic has
been falling as services like WhatsApp have grown in popularity. Steady decline in
voice traffic has been the trend although there were some increases in some quarters
in the last few years. According to Ndamu Sandu (2016), decline in voice revenue
performance is being prompted by subdued economic activity and the liquidity crunch.
Voice tariffs have not been met by an increase in the volume of telephone minutes in
terms of voice calling,” she said.
c. VoIP
Postal and Telecommunication Regulatory Authority in Zimbabwe (2016), pointed out
that local operators have complained that their revenues and profits are being eroded
by Over-the-Top service providers. Revenues have been declining since 2013 as a
result of the substitution of the voice and sms by IP voice and messaging services of
the international OTT players who ride on their networks. The growth in data revenue
has not been sufficient to offset the sharp decline in voice and sms revenues. TelOne
offers VoIP for business and homes. Making calls on the internet is one of the biggest
disruptions that has hit telecommunications companies as a result of the internet.
TelOne is becoming more innovative and aggressive in pushing this service. Examples
of OTT messaging are skype, viber, facetime and WhatsApp. According to Postal and
Telecommunication Regulatory Authority in Zimbabwe (2016), these OTT VoIP
services have witnessed strong growth over the past few years which can be attributed
to several factors such as increasing smartphone penetration, increasing broadband
coverage and usage as well as their low costs which can make them an attractive
proposition, especially for international calling. The most popular of these services in
Zimbabwe is WhatsApp. WhatsApp accounts for 95% of all OTT VoIP traffic in the
country (Paul, 2009).
d. The data centres and cloud computing
A new report from Synergy Research Group found that telecommunications
companies focused on the cloud managed to bring in $150 billion in the revenue
through the first half of 2019. Cloud operators and vendors working in seven distinct
service and infrastructure market segments managed to reach the milestone by June,
representing a 24% increase from 2018. Gartner (2019) predicts that global public
could revenue will grow to $278bn by 2021. This indicates a $102bn growth from
2018. As cloud adoption continues to expand, traditional data centres have started to
face a number of challenges that is incremental revenue potential is very limited, data
centres are losing direct contact with end users to the disintermediation and customer
workloads are moved by large public clouds, hosted in dedicated cloud provider
facilities. TelOne launch their data centres in 2017. They are targeting enterprise
customers. According to Beaven Dhliwayo (2017), the data centre comes after TelOne
suffered losses because of the general decline of voice services as customers now
prefer Over-The-Top (OTT) instant messaging services provided by third parties, for
example Facebook and WhatsApp applications. This data centre is a subject that was
born out of the National Broadband Project under the $98 million China Exim Bank
facility being implemented by Huawei. Without the support and guidance, the
company got from government they would not have been able to have such capital
(Dhliwayo, 2017).
e. Installation and monthly rental fees
Installation fees revenue is recognised on date of service connection. Monthly rentals
are recognised as revenue as the clients are provided access to network based on the
agreed fixed charges (Karakandai, 2015).
f. Other Income
This is income from non-core activities for the business. It is income from the sale of
goods and services that are non-telecommunication (Karakandai, 2015). Income from
the sale of goods is recognised when the significant risks and rewards of ownership
have passed to the buyer. Income from the sale of goods is measured at the fair value
of consideration received or receivable (Karakandai, 2015). Income from services
rendered is recognised with reference to the stage of completion of the transaction at
the reporting date. Other income also includes income from the rental of properties
and income from training services. Sale of redundancy material for instance copper
cables, motor vehicles, telephone handset and other machinery and this is done at
Masasa- TelOne warehouse (Karakandai, 2015).
g. Finance
This is income earned from financial assets, money market placements and accounts
at financial institutions. As a way of encouraging customers to settle all current bills
on time interest is now being levied on all overdue accounts in line with the client to
the revenue authority on a cash basis (Karakandai, 2015)
h. Deferred Revenue
Revenue is deferred when revenue has not yet been earned. The Company has deferred
income arising from loan and debt forgiveness agreements which are conditional.
Revenue is deferred over the period of condition. Revenue is realised as the condition
is met and through profit or loss (Karakandai, 2015).
i. Loans
According to the Postal and Telecommunication Act, [Chapter 12:05], Zimbabwean
Telecommunications Companies can borrow money only for capital expenditure upon
full consultation with the stakeholders and approval of the Minister. Garakara et al
(2017), asserts that telecommunication companies’ loans are suited for their
expenditures and can be paid in small increments from the future revenues. She adds
on to say that there is a limit to borrowing because the credit worthiness of the
telecommunication companies is not well established and central government might
want to control or guide allocation of local investment.
A strong telecommunications system is needed when acquiring loans as loans
allocations are based on the forecast of the capacity of the borrower to pay back,
(Elock, 1994). Jeyacheya (2015), states that borrowed money can improve a
telecommunication companies’ capacity to improve service delivery. However, in
recent observations telecommunications cannot borrow, as they do not have the
capacity to repay loans since their collections are low.
j. Investments
The Ministry of
Information
Technology and Courier Services advises
telecommunications companies to invest if they have surplus money through various
interest earning instruments with registered financial institutions and treasury bills or
any statutory body (Ranganai, 2019). Investments are an important stream of income
and enhance service delivery, but telecommunications companies (TelOne) cannot
invest in riskier investment vehicles, such as quoted and unquoted stocks, without the
approval of the Minister responsible for Information Technology and Courier Services,
(Chatindo, 2015). However, due to the volatile economic situation, telecommunication
companies do not have excess cash to invest in and the contribution of investment
income is very low thus resulting in the decline of revenues in telecommunications
companies (Moyo, 2018).
k. Income generating projects
According to
the
Postal
and
Telecommunication
Act,
[Chapter
12:05],
Telecommunication Companies are allowed to operate income-generated projects of
their choice to raise revenue. Magadu (2014) states that, telecommunications
companies may raise revenue through engaging in any commercial activity or projects
for the purpose of raising revenue. TelOne has set up income generating projects such
as TelOne Center for Learning and TelOne Msasa Factory among others.
However, Chatindo (2015), states that there is abuse of telecommunication companies’
property and assets by both workers and officials, as a result the money that is meant
for service delivery is used for personal gain. Hence most of these ventures have
seriously underperformed and have failed to contribute anything towards
telecommunications revenue. Most income generating projects such as TelOne Center
for Learning and TelOne Msasa Factory have since fail to perform well due to the
liquidity crisis and management (Ranganai, 2019).
l. Government grants
Muchinguri (2015), states that grants from central government are an important source
of finance for implementing projects and services such as technological advancement
and education. There are two types of grants that is, block grants which are
unconditional with no specifications for the use but only accounting for the use and
tied grants, which come with terms and conditions. Section 301(1) of the Constitution
of Zimbabwe Amendment (No.20) Act 2013, states that, government is supposed to
give not less than 5% of national revenues raised in any financial year to
telecommunications companies however, the government is not remitting this
constitutional provision which would go a long way in improving the revenue base of
telecommunications (Adaramba, 2020).
According to the Zimbabwe Institute (2017), telecommunication companies are
struggling to provide services to their clients due to the reduction in government grants
and own source revenue. Grants have often caused dependency syndrome in most
telecommunications companies and at the same time promoted recklessness in the use
of funds as they will be assuming that more grants will be coming.
m. Partnerships
According to Postal and Telecommunication Act, [Chapter 12:05], telecommunication
companies can cooperate with the state or any other corporates or person and enter into
partnership. As noted by Mutandi (2015) such ventures help telecommunication
companies (TelOne Zimbabwe) bridge cash shortage gaps and enhance service
delivery and telecommunication companies can enter into partnerships with private
companies like how TelOne Mutare Branch partnered with Destiny of Africa, and this
has enhanced service delivery in Mutare.
2.2.6 Causes of Revenue Decline
According to A Calton (2006), in article titled “ The African Journal of Information
and Communication (AJIC),” the following reasons for poor debt collection in African
Telecommunications Companies were cited:
Lack of skills and capacity to manage the collection of outstanding debt; Lack of
integration and coordination among the financial management, credit control and debt
collection systems within the telecommunications companies; Incorrect interpretation
of legislation pertaining to credit control and debt control procedures and; Lack of
political will to enforce credit control measures on indigent households and
government departments who influence the operations.
Telecommunications Companies are failing to provide adequate services to the people
as a result of revenue decline which is caused by several factors such as corruption,
lack of skilled expertise, the failing economy, poor financial management among
others. The South African Journal for Communication Theory and Research (2009),
noted that over the past decades many telecommunications companies have become
less sustainable as they are confronted by escalating uncollectible consumer debt and
service delivery backlogs. The following are causes of decline in revenue in
Telecommunication Companies.
a. Poor financial control systems
The Journal of Development and Communications Studies (JDCS) (2017), noted that
challenges faced by telecommunications companies in raising revenue revolve around
the failure to ensure effective financial management systems that results in levying
high local and international voice tariffs and also broadband tariffs. She added on to
point out that there is failure to recover debts owed in the hyperinflationary era and
also poor financial accounting systems. The management of debt is poor as evidenced
by huge mismatches between creditors and debtors as a result of the poor financial
mismanagement control systems, hence resulting in revenue decline as
telecommunications companies fail to account for most of their income.
b. Poor administrative capacity
Fjelstad and Semboja (2000) cited poor administrative capacity as contributing to
telecommunications companies’ inability to realize fully the revenue due to them.
They cited most telecommunication companies in Tanzania as having fewer debt
collectors than the number of market centres. Lack of reliable transport may also
further exacerbate the situation.
c. Poor economic situation
Rhodes (2008) explained that the national economic performance has a significant
impact on the performance of telecommunication companies and the business
community at large. He asserts that the impact of inflation and rising interests rates
present unintended consequences that have a negative impact on the consumer’ s ability
to pay for telecommunication services thus affecting telecommunication companies’
budgeted revenue and collection of debts. Due to stretched disposal income consumers
may find it difficult to pay for telecommunications services or to pay at all.
According to The Southern African Journal of Communication and Information
Science, telecommunications companies are failing to raise sufficient revenue as a
result of the failing economy. In 2009 when the Zimbabwean government adopted the
multi-currency monetary system the economy stabilized for a while but this
dispensation brought with it new challenges for telecommunications companies and
other players in the economy.
According to Coutinho (2010), the multi currencies facilitated the rise in the
unemployment rate by 80 percent and liquidity shortages thus most residents and
stakeholders could not afford the charges that telecommunications were demanding.
Because of this, most telecommunications companies could not collect the monies they
billed their customers, hence contributing to revenue decline.
d. Non-payment by clients
The culture of non-payment of debts by residents and other stakeholders whose
telephone accounts, leased internet circuit, Ka Band and Vsat are still on post-paid
have increased the outstanding debts of Telecommunication Companies for services
rendered to them. According to The Liberalisation of the Telecommunications Sector
in Southern Africa Journal (2009), debt collection in poor communities has not been
successful because of the economic status of the individual debtors.
The Mobile Media and Communication of 24 January 2017 quoted the Mutare
residents and stakeholders association saying that, “ we have not seen any serious
efforts by the telecommunication company to deal with allegations of fraud and
mismanagement and for us to continue funding such a telecommunications company
will be unfair to our conscience,” Hence, this is one of the causes of revenue decline
as it is apparent residents and stakeholders will mostly be interested in paying their
levies due if they are seeing visible telecommunications company’ s activities in
service delivery.
e. Corruption
Garner (2004), states that corruption is the act of doing something with intent to gain
some advantage, which is inconsistent with official duty and rights of others. This has
greatly contributed to the revenue decline in telecommunications companies as funds
are being misused and it has destroyed the goodwill between the telecommunication
company and the residents in them resisting to pay their dues.
According to Kunaka (2002) corruption leads to low level of infrastructure
development as funds earmarked for development purposes can often be diverted
towards other things that do not benefit the community. Ultimately corruption has led
to poor service delivery. Due to corruption, telecommunication companies have lost
millions of dollars, which has an impact on the collection of revenue and budget
preparation, (Ruwende, 2014). According to Lubbe et al (2009), at times consultants
are appointed at great expense to do the work of corrupt and incompetent persons who
are responsible for unacceptable ethical behaviour hence affecting revenue income.
Fjelstad and Semboja (2000) also advocated that corruption is extensive in many
telecommunication companies and is a serious challenge to revenue collection. The
same can be said of Zimbabwean telecommunications companies. The most type of
corruption is embezzlement of revenues by debt collectors and administrators. The
main factors contributing to such type of corruption are low levels of wages paid to
staff.
f. Network vandalism
Security challenges to telecommunication networks have been a matter of a concern
to the international community with the last two decades (Adaramba, 2020).
Telecommunication infrastructure that provides the necessary backbone for
information exchange such as voice, video, data and internet connectivity have been
found to be particularly vulnerable to various forms of attacks (Ocheni, 2014). Some
of these attacks could lead to denial of service, loss of integrity and confidentiality of
network attacks and large financial losses. Vandalism and theft of telecommunications
infrastructure has resulted in telecommunications companies to lose property and
equipment worth more than US$100 million every year (Easton, 2018). The vandalism
infrastructure affects virtually every sector of the economy from telephone companies,
municipalities, government departments, corporates, education institutions and
ordinary consumers (Nhowe, 2020).
According to Mthandazo Nyoni (2019), network vandalism has been a major
hindrance in revenue generation due to the continued disruption of service. A leading
challenge in the Global System for Mobile Communication (GSM) market faced by
the licensed operators in Nigeria is often the destruction of several installed equipment
like Automatic Voltage Regulators (AVR), generator sets, diesel, air-condition units
by hooligans. Replacing these stolen or destroyed installations constitute a serious
deterrent to the operations of the GSM companies. Due to the vandalism of these
equipment, one of the operators had to close down one of their bases in Lagos (Paul,
2009).
In Nigeria, India, Iraq, Syria, Nepal and Columbia were mentioned as countries that
have experienced telecommunication infrastructural destruction due to insurgency and
military conflicts. For example, in 2012 alone, Boko Haram (a terror group) in Nigeria
destroyed or damaged about 530 base stations and killed staff, causing an estimated
$132.5 million in damage. Such funds could have been used to further develop or
expand telecommunications networks in Africa’ s largest economy (Olunvatibi, 2012).
In Afghanistan between 2001 and 2013, at least 300 telecommunication towers were
destroyed by the Taliban. In both cases, transmission towers and outdoor equipment
were targeted and destroyed. The decision by terrorists to target infrastructure is
probably based on the extent to which they perceive the telecommunication operators
as undermining their security through call tracing to the benefit of government forces
(Adeyemo, 2017).
Also, in Zimbabwe people have seen value in copper, ZESA and TelOne have been
hit because their old network infrastructure phone lines, including for the internet
service, ADSL, is on copper lines (Bird, 2018). According to severe vandalism of
TelOne infrastructure began in 2001 when tones of materials especially copper was
vandalized mainly for exports. This has resulted in destruction, interruption of
essential service and failure by the state company to provide efficiently service
delivery. The state organisation cannot expand its networks they concentrating on
replacements (Pretorius, D., & Schurink, W., 2015). This slows down the efforts of
putting new connections in the national grid (Nhowe, 2020). The scourge of vandalism
led to a monthly revenue loss of more than $2.2 million in 2018,” she said. “ In the past
year, TelOne incurred costs of more than $913 000 for repair of damaged network
through labour costs and cost of replacing the stolen cables. Other than loss of revenue,
vandalism causes loss of customer confidence in TelOne’ s service, leading to damage
to the company’ s reputation (Nhowe, 2020). Therefore, we have intensified the
crackdown on vandalism,” she said. Harry said TelOne had embraced government
plans for partial privatisation and looks forward to getting investors who not only bring
the much-needed capital injection, but also skills to grow the business revenue.
g. Lack/loss of skilled expertise
The lack of skilled personnel from both elected and appointed officials has also
contributed to the revenue decline in Telecommunications Companies. According to
Gokhale (2012), lack of skills and the ability to manage the collection of debt has
affected the financial performance of many Telecommunication Companies. This has
greatly affected the operations in Telecommunications Companies as poor decisions
are made. The absence of critical staff like technical and financial experts is
contributing to the unsustainability of Telecommunication Companies.
Moreover, Chakaipa (2010) adds on to say that if the economy is performing poorly
and there are high levels of unemployment it leads to brain drain whereby qualified
and skilled labor force leave the country in search for better working conditions. This
goes on to affect telecommunication sector because telecommunication companies
will be left with unskilled personnel with no capacity to develop their companies.
According to Gono (2006), high staff turnover, especially critical professionals such
as technical staff and financial experts contributes revenue decline as staff members
remain in acting positions for long periods and are unable to make sound decisions
which ultimately affects the formulation and implementation of revenue enhancement
strategies.
Zimbabwe had a substantial pool of human resources for the ICT sector, but there has
been a serious exodus of experts, especially in the field of science and technology
(Nhowe, 2020). Since 2000, many of these professionals and experts have migrated to
other countries in the region and overseas. There is a continuous loss of skills from
TelOne to NetOne, and from TelOne/NetOne to the private sector and the Diaspora
(Muller, 2010). The private operators are also losing staff to the Diaspora, particularly
in South Africa. There is now a serious shortage of professional skills related to the
regulation of the ICT industry, at a time when substantial improvements will be
required on this front (Kellan, 2009).
Loss of skills at TelOne has been especially serious. The skill shortage is contributing
to slow network development by TelOne as management efforts concentrate on “ firefighting” activities such as service restoration (Magala, C., & Rubagumya, A., 2012).
Many of the faults on the network are induced by manpower shortages. There is a rapid
deterioration of network elements due to inadequate maintenance. Furthermore, the
loss of skilled staff in the commercial department of TelOne has significantly reduced
its ability to negotiate interconnection arrangements with mobile networks (Bird,
2018). TelOne’ s business operations and investments intentions are also constrained
by continuation of obsolete services such as telegraphy (Uhunmwuaghto, S., &
Stainley, A., 2013).
As government owned companies, TelOne and NetOne are required to supply the
Government with services at non-commercial rates and must comply with bureaucratic
government procurement procedures (Slack, 2009). TelOne continues to act as a
training ground for the sector, but the costs of training staff are high and they cannot
be fully absorbed by the company. As a result, the quality of training offered by the
TelOne training centre in Harare has deteriorated (Mbufu, 2013).
Substantial technical support may be required to address the wide range of policy
issues that are arising in connection with Zimbabwe’ s efforts to accelerate the
development of the sector, while at the same time, attracting private investment and
promoting increased competition among service providers (Muller, T., & Werterg, j.,
2011).
h. Foreign currency shortages and price hikes
The impact of telecommunications companies not being allocated enough foreign
currency has far-reaching implications on Zimbabwe’ s already ailing economy. Just
like other sectors, the telecommunications sector has not been spared and this has
forced the companies to review their tariffs upwards as a result of rising operating
costs, system upgrades and new equipment. The companies sang the same hymn when
it comes to the issue of foreign currency shortage which has adversely affected their
operations in a huge way and failure to address this problem is obviously not the best
thing for the country. They will have to continuously adjust their tariffs for them to
realise profit and remain in business.
The capital intensive nature of Zimbabwe’ s telecommunications sector presents a
myriad of business challenges as there is global technological change that has seen the
emergence of multiple digital platforms that aim to enhance business and life in
general. The growth of the telecoms industry comes with many demands ranging from
infrastructure, system upgrades, internet landing costs and equipment.
Carlos (2019) in an article titled ZIMTECH REVIEW states that Zimbabwe’ s telecoms
sector has suffered a $37.1 million decline in revenue for the first time ever in the past
four years. The latest Postal and Telecommunications Regulatory Authority of
Zimbabwe (POTRAZ) sector performance report for the first quarter of 2019 indicated
the shocking major revenue decline, projected to increase in the second quarter.
Experts in the sector have decried government refusal to hike prices, and also said
operation costs have also shot up, with city council-rented base stations shooting up
by more than 100 percent. The last “ price review” happened when all
telecommunication service providers aligned their prices to the US$ equivalent after
authorities removed a peg for its surrogate bond notes and electronic dollars in January
2019 (Carlos; 2019).
i. Power Blackouts
The standing electric power supply is not able to satisfy the requirements of the
telecommunications sector in Nigeria. In order to maintain a regular network, the
operators have resorted to powering their Base Transmission Stations (BTS) with
generators that have an automatic trigger whenever there is any form of power outage
from the mains supply. As a result, diesel storage tanks are built at the sites and supply
the generators periodically. Since self-generation electricity constitutes the highest
cost of production, the Global System for Mobile Communication (GSM) operators
charge high tariffs to make up for the cost.
According to a report by the Posts and Telecommunications Regulatory Authority of
Zimbabwe (POTRAZ) the telecoms industry recorded a 4% decline in mobile voice
traffic from 1.467 billion minutes, to 1.404 billion minutes in the first quarter of 2019.
Active internet subscriptions also decline by 3.3% to 8.4 million, from 8.7 million
which saw the internet penetration rate drop by 5 percentage points to 57.9%.
Chimuti (2019) in an article titled, “ Zimbabwe: Zim Power Balckouts Trigger Turmoil
in Telecom Sector” mentioned that the power challenges threaten to cause a further
decline in telecoms product usage in the second quarter of 2019, according to analysts
owing to the non-availability of electricity to power mobile network base stations.
Industry sources say they have since recorded the highest number of ‘ down times’ at
their sites at any given time, due to unavailability of power through load shedding. “ A
new record of site down times was actually set last week. As we speak, many sites are
down due to ZESA load shedding and fuel stock out,” said a source familiar with
developments at one of the country’ s telecommunications network operators (Chimuti,
2019).
Players in the industry have resorted to the use of costly diesel generators to power
base stations, but current fuel shortages have meant that not all of them can be refuelled
on time, said the source, estimating that some of the bigger NMOs were now using
over 100,000 litres of diesel per month.
“ With the price of diesel now over $17.95 per litre, you can imagine the huge cost all
the operators especially TelOne, Econet, NetOne, Liquid Telecom and ZOL which
have the widest network coverage- are spending just to keep the networks up in the
current circumstances of daily power blackouts,” the source said.
j. Exchange rate
Garakuni (2019) in an article titled, “ WallAfrica” mentioned that the increased cost of
doing business has also come at a time the telecoms sector has been charging what are
now very sub-economic tariffs, following the movement in the exchange rate after the
introduction of Statutory Instrument 142 of 2019. The local currency through the telco
operators are paid has been severely hit by the exchange rate, which some say has
reduced their incomes in real terms by a factor of close to 60% since the new interbank
market was introduced. (Garakuni, 2019).
Garakuni et al (2019), the move saw the value of the local dollar weaken to an
exchange rate of 1:9 from 1:2.5. At current tariffs, local telecoms players will find it
very difficult to buy foreign currency, which has become so expensive. The cost of
doing business with local service providers has also gone up, rendering current tariffs
very uncompetitive- which have remained the same since the exchange rate between
the US dollar and the Zimbabwe dollar (Garakuni, 2019).
k. Political environment
Politics has a major impact on revenue generation in Telecommunication Companies.
Cohen (2010) asserts that whenever there are different parties with different political
ideologies in the Telecommunications Companies, the chances of reaching common
consent reduced to a minimum. Ministry of Information Communication Technology
and Courier Services in Zimbabwe has been seen to be intervened into the affairs of
Telecommunication companies restricting their autonomy hence affecting their
revenue collection strategies as is evidenced by the slashing of bills in 2013.
Also, The Future of Telecoms in Africa (2006) noted that the lack of political will by
elected politicians to enforce mechanisms such as credit control tools has resulted in
Telecommunications companies failing to raise revenue. Political interference from
politicians prevents officials from collecting service fees in arrears and there is no
political will to effectively discipline officials of Telecommunications companies,
(Lubbe et al; 2006), further highlighted that officials who are political appointees have
tended to lack necessary technical expertise required for prudent policy making. Most
of the officials are into Telecommunication Companies to pursue their own political
self-interests and may not necessarily add any value to the running of the entities thus
contributing to the ineffective collection of revenue in Telecommunication Companies
which ultimately leads to revenue decline.
Hence from the causes mentioned above, Gono (2006) substantiates the fact that as a
result of the poor economy the revenue base for Telecommunications Companies has
shrunk as traditional sources of revenue including voice and internet from central
government have shrunk steadily. He adds on to say that, Telecommunications
Companies have found it difficult to increase voice and broadband tariffs because of
the fear of political protests and the lack of adequate communication especially
between Telecommunications Companies and stakeholders stalls the progress in most
cases.
Moreover, Mclean et al (2008) also pointed out the factors, which affect the financial
performance of Telecommunications Companies in the submission to the Sub-Saharan
Africa Mobile Telecoms Market and noted the following:
Operational effectiveness; the capacity and compliance of residents and other
stakeholders to pay services; the amounts that Telecommunications Companies
receives from the central government in forms of grants and subsidies; the level of
charges that are used to improve the outlay of providing services; and market
description of services that are provided.
The factors mentioned above show how the operational capacity of an organisation in
terms of whether or not it has adequate and qualified staff to ensure that sound policies
are formulated and adopted for revenue collection, determine the ability of the
organisation to efficiently and effectively collect revenue. Hence this is one among
other factors which seem to be affecting revenue collection in Zimbabwean
Telecommunication Companies. It should be noted that the resistance of residents and
other stakeholders is high and their compliance is low thus contributing to the decline
in income for Telecommunication Company. Also, central government is not
supporting Telecommunication Companies in terms of grants and subsidies and this is
contributing to revenue decline.
l. Stiffer Competition from Mobile competitors
Competition is an increasingly important theme in telecommunications policy. It has
been credited with expanding services, lowering prices, and stimulating innovation.
(Jamison et al.
2009) But competition can raise difficult challenges for
telecommunications policy makers and regulators. One of these challenges is
determining the optimal mix of market and regulatory involvement in determination
of prices, services, and investment decisions.
Technology changes have weakened the long-held argument of economies of scale and
scope that favour a natural monopoly for the telecommunications industry. Therefore,
competitive provision of telecommunications services has become a common
phenomenon
throughout
the
world,
including
Africa
(Dewa,
2018).
Telecommunications competition in Africa has been seen primarily in the cellular
segment of the industry, and rapid service expansions have been observed in many
countries. For example, the average annual cellular expansion rate in Africa increased
from 60 percent in the mid-90s to more than 100 percent in 2000 (ITU). What
determines the growth of mobile connections in Africa? It is important because mobile
technology growth has out-spaced fixed wire growth in many countries in Africa, and
yet is not the main source of telecommunications service for many people (Ndarerwa,
1996). A number of factors can explain this growth, including the traditional ones,
such as long waiting-time for fixed line connections and overall dismal performance
of the fixed telecommunications network (Kunju, 2014.).
Mobile telephony has brought particular benefits to low-income users. Operators have
used prepaid subscriptions to serve low-income users without incurring credit risk.
Prepaid options tend to be more expensive, but they do not require credit checks, and
they have relatively low monthly subscriber fees (Adaramba, 2020). Consumer prefer
not to submit their credit history for inspection, and they enjoy taking control of their
expenses. Pre-paid services have contributed to the exponential growth in mobile
subscribers in many countries. In Mexico, Venezuela and Peru, the number of
subscribers on prepaid plans is much greater than the number of subscribers on fixed
landline telephones (Bird, 2018).
Mobile telephony has become a substitute for fixed-line telephony. Mobile telephony
has brought benefits to other telecommunications markets (Ndiringepi, 2009). Several
companies have used mobile services to enter specific countries, establish a brand
name, and later expand their service portfolios to include data services, internet access,
long distance and ultimately fixed-line or fixed wireless services. Examples include
the Dominican Republic, Mexico and Brazil. Some evidence also indicates that the
success of mobile telephony may also have placed competitive pressure that has
yielded improvements in fixed-line telephony (Gono, 2019).
As with other countries, Australia has experienced very rapid growth in mobile
telephone services. This growth shows signs of continuing for the foreseeable future
(Olunvatibi, 2012). More than 2.3 million mobile telephone handsets are now in use,
with around one million handsets having added in the last year compared with a total
of around eight million fixed telephone lines. This represents a mobile telephone
penetration rate of some 13 percent of the population and which is exceeded only
Sweden (Easton, 2018).
Mobile telephone calls therefore account for a significant and rapidly growing share
of total calls including local calls. While the mobile services provide new products and
convenience features compared with fixed line telephony, they also undoubtedly
provide a degree of substitution for and hence competition with fixed line service
(Easton, 2018). Competition for customers transferring to the digital networks is
already vigorous with heavy discounting of handsets and customer tariffs.
In Nigeria, most competition has come in the form of mobile telephony. Because the
fixed line network was in horrific condition, and the fixed costs of building out a
wireless network relatively low, new entrants were able to build wireless networks and
attract large numbers of customers relatively quickly (Cohen, 2019). Indeed, it is not
much of a stretch to claim that the true mobile revolution occurred in Nigeria not by
providing wireless internet or data services, but simply providing viable competitor to
the fixed line incumbent. In many cases, the incumbent has already lost a substantial
degree of market power by the time it realized that mobile telephones were true
competitors (Wegner, 2018).
According to Victoria Mtomba (2013) in Security and Communcation Networks, the
mobile phone has changed the face of the world and re-defined the rules of
communication and, consequently, relegated the fixed landline to the dustbin of
history. Although some people still use landline phones for communication across
distances, the numbers are increasingly declining as new multimedia technology takes
strong hold.
Within the new dispensation itself, fast-paced developments have been witnessed.
Although the first hand-held mobile phone introduced by Martin Cooper under the
Motorola brand weighed 1kg, the in-thin now are feather-weight smart phones. Trails
for the mobile phone were carried out in trains running between Berlin and Hamburg
for first class travellers. The emergence of this new gadget has outpaced the use of
fixed landlines in Zimbabwe (Moyo, 2018).
With the mobile phone in hand, one has the world in their palm due to the multiple
functions of the modern phone. Although communication across distances remains the
major function through audio speaking, with the latest mobile phone varieties, one is
able to text, watch videos, listen to the radio and browse the internet. TelOne,
compared to other players in the sector, has the smallest subscriber base as its biggest
market is fixed landlines whose use is, however, declining by the day (Ndarerwa,
1996).
Furthermore, in 2015 there was a shakeup in fibre internet services, unbelievable
mobile broadband promos that came and went, changes in VSAT courtesy of
regulatory intervention, some brush-ups on certain WIMAX services, increased
competition in the WIFI hotspot arena and some adjustments to ADSL (Ronald, 2013).
Outside ZOL's free Wi-Fi hotspots (that give you a 30-minute window everyday) you
need at least 50 cents to access the internet in Zimbabwe, and thanks to some of the
promotions being run by mobile network operators like Econet, and some Wi-Fi
providers like Africom, that will get you 50 MB of data. For mobile broadband users
without access to hotspots and looking beyond these promos, 50 cents is only good for
at most 8 MB data (Zhou, G., & Chilunjika, A., 2018).
Furthermore, broadband penetration is an important factor for revenue growth for
telecommunication companies by improving productivity, accelerating innovation and
providing opportunity for new products and services. While the developed world
discusses the merits of fixed and mobile broadband, it is clear that for Africa, fixed
broadband in the form of fibre to the home (FTTH), or even just plain ADSL, will only
reach very few urban elites in the next decade. In Africa, mobile voice overtook fixed
voice at the turn of the millennium with the introduction of prepaid services (Bird,
2018). Ten years later, mobile internet is rapidly overtaking fixed internet by
overcoming key obstacles to fixed internet access. Mobile internet requires fewer ICT
skills than are required to operate a computer, hardware and subscription cost are less,
it is available as prepaid, and it does not even require electricity at home, something
the majority of African households still struggle access (Gono, 2019).
Broadband internet is improving the lives of people in developing nations and
facilitates access to economic opportunities and social welfare that were previously
inaccessible to the poor (ITU, 2012c). For example, mobile broadband has been
driving financial inclusion through mobile banking and mobile money in Africa, and
it supports new ways of delivering healthcare in developing nations (ITU, 2012c).
However, in developing nations fixed broadband is growing slowly, providing
opportunities for mobile broadband to fill this void (ITU, 2012a). Mobile broadband
is thus expected to support growth in the economy more than fixed broadband has done
(Mulas, 2012).
Lee et al. (2011) analysed broadband diffusion in OECD countries and found that
mobile broadband was complementary to fixed broadband services in the initial
deployment of broadband. However, technological progress in wireless broadband
increases fixed-mobile substitution. Lewin et at. (2009) argue that mobile broadband
networks are unlikely to offer a full substitute for next-generation fibre access in terms
of speed and reliability, and expect fixed IP-based traffic to grow faster than mobile
IP-based traffic driven by video content and cloud computing.
What is clear from this analysis is that, the African context, taking into account the
fast uptake of data services and the decline of fixed subscribers, fixed lines may be
offered as an additional service to ADSL services; contrary to Europe where ADSL
has been a reason not to cut the cord and it is provided as an added value to fixed lines.
The voice battle between residential wired mobile was lost in Africa in the last decade
(Moti, 2012). Whether fixed-line operators will also lose the data battle will be
determined by their business decisions in the next two to three years. Wired broadband
is losing ground quickly to mobile broadband in Africa. Fixed-line operators mostly
offer ADSL, which can no longer compete with mobile broadband speeds (Dewa,
2018).
2.2.7 Strategies to Improve Revenue Generation in Telecommunication
Companies
According to the Revenue Generation Strategies in Sub-Saharan African Region
(2015), described the strategy of revenue generation as the bedrock of any
Telecommunication Company. The validity of any Telecommunication Company
depends on the level at which the services are rendered and the quality of those services
are inextricably linked with the financial resources available to them. Fjelstad and
Semboja (2000) list the following as the ways of improving revenue collection and the
revenue base of Telecommunication Companies:
Staff training; Improving billing system; Leasing of property; Improving incentives to
staff so as to attract, recruit and retain staff; Income generating projects; Cost recovery
through user charges; Improvement to remaining revenue bases and; Adequate control
systems.
The strategies mentioned above should be employed by Telecommunication
Companies so as to improve their income because through improving incentives of
employees it motivates them thus boosting their morale and ensures their unwavering
effort in revenue collection and it also averts survival corruption. The revenue base of
Telecommunication Companies can be improved through embarking on income
generating projects which are supposed to be managed properly. More so,
Telecommunication Companies need to improve their billing systems to ensure that
statements arrive on time so that customers prioritize on paying telephone bills. These
strategies among others should be employed so as to resuscitate the declining revenue
base of Telecommunication Companies.
Hofer and Schedal (2009) also suggest the following strategies for effective revenue
generation:
Taking advantages of business or commercial opportunities in their local areas;
Providing an incentive for extra efforts of the revenue generation staffs; Efficient and
effective collection of existing debts; Public enlightenment and campaign that will
educate the customers on the importance of prompt payment; Tapping all available
opportunities in the areas; Introduction of additional sources of revenue and; Periodic
raiding by officer of the revenue generation.
From the strategies mentioned above by the author, it is worthwhile to note that public
enlightenment is crucial for customers because if they are involved and consulted in
terms of revenue generation and collection, a sense of responsibility can be inculcated
within them as they get to know the importance of them paying bills to TelOne so that
they can provide services to them. Also, Telecommunication Companies should tap
into all the available opportunities in their area taking advantage of the business and
commercial opportunities in their areas so as to improve their revenue base.
a. Government’ s Intervention to reduce the cost of investment
Fibre optic cable networks are usually built along existing infrastructure networks such
as roads, railways, pipelines, or electricity transmission lines. Most of the cost of
constructing fibre cable networks along these alternative infrastructure networks lie in
the civil works, which typically account 70 percent of total cost. These costs represent
a major fixed and sunk investment for the service providers. The Government can
increase incentives for private investment in backbone networks in three ways
(Adaramba, 2020).
b. Gover nment’ s inter vention to make r ights-of-way
By making rights-of-way readily available to network developers at low cost.
Obtaining these rights-of-way is often very difficult because of lack of a clear legal
framework and the multiple jurisdictions involved. By simplifying the legal process
and limiting the fees that can be charged by local authorities for granting rights-ofway, the government can reduce significantly the cost of backbone network
development (Kunju, 2014.).
c. Gover nment’ s inter vention thr ough pr oviding dir ect access to existing
infrastructure
By providing direct access to existing infrastructure which it owns through stateowned enterprises. For example, the railway company could partner with one or more
operators to build a fibre optic cable network along the railway lines. This approach
has been used very successfully along the world to develop extensive backbone
networks at relatively low cost (Easton, 2018).
d. Gover nment’ s inter vention in the backbone networ k development
By providing specifically for backbone network development in the design and
construction of other types of infrastructure; for example, by pre-installing ducting
when roads are built and then leasing these ducts to operators wishing to lay fibre optic
backbone networks, the Government can significantly reduce costs (Adeyemo, 2017).
Steps can also be taken to promote infrastructure sharing where it does not have an
adverse impact on competition. By sharing network infrastructure, builders of
backbone networks can significantly reduce costs and make investment in them more
commercially viable (Cohen, 2019). This is particularly relevant for fibre networks in
urban areas where the revenues generated by such networks are typically low. In some
cases, operators have a commercial incentive to enter into these sharing agreements.
For example, in Nigeria, where there has been extensive fibre optic cable network
rollout, operators have entered into a variety of network-sharing agreements aimed at
reducing costs and improving quality of supply (Bird, 2018). However, to avoid an
unwillingness by some operators to share, the Government may need to consider the
use of legal mechanisms that will facilitate these arrangements without compromising
competitiveness in the market (Adeyemo, 2017).
e. Gover nment’ s inter vention thr ough r educing political and commercial
risks
To reduce political and regulatory risks, consideration can be given to the use of risk
guarantees and insurance. Companies operating in risky environments are likely to
place a premium on scalability and reversibility in their network infrastructure
investment decisions (Ndarerwa, 1996). Scalability means that network investment
takes place in small increments, rather than large one-off expenditures. Scalable
investments allow operators to expand their network as demand develops, hence
reducing risk that networks are over dimensioned. Reversibility reflects the ability of
a network operator to reverse investments and sell or reuse capital equipment if
necessary (Uhunmwuaghto, S., & Stainley, A., 2013).
Some types of network investments are more reversible than others. Microwave and
satellite transmission equipment can be moved and used in another part of a network
if necessary. Since most of the capital cost of a fibre network lies in civil works, such
as construction of trenches and installation of ducts, that cannot be moved once built,
investment in such networks is largely irreversible. In this case, investment has to be
well planned and rolled out in a systematic way to avoid future loss of investment cost
and infrastructure by any other construction works along the road or railway lines
(Slack, 2009).
Another measure to be considered is the reduction of commercial risk through demand
aggregation. Two key risks that demand does not develop as anticipated and that the
cost of obtaining customers turns out to be higher than anticipated. These risks can
significantly raise the economic cost of an investment and create a disincentive for
operators to invest in infrastructure, particularly in physical assets that may constitute
a sunk cost (Moti, 2012). One way that the Zimbabwe government can reduce these
risks is to act as a central purchaser of services on behalf of all public institutions at
all levels (including, for example, schools, health centres, and local government). By
doing this, operators effectively deal with a single large customer rather than multiple
smaller customers, hence reducing commercial risks (Muller, T., & Werterg, j., 2011).
Such a strategy or policy has been adopted by various countries where the governments
promoted the rollout of high-speed backbone infrastructure by acting as a single
purchaser of broadband connectivity on behalf of public institutions, hence reducing
operator's risk of investment (Garaiza, 2014).
2.3 Empirical Evidence
Effects of Technology and Information Systems on Revenue Collection by
Telecommunication Companies in Kenya; (H, Karimi) (K, E, Maina) (J. M,
Kinyua) (2017)
As cited by Machingauta (2014), the paper studied the weight of information systems
on revenue collection in telecommunication companies. The study established that
there is a relationship between information systems and equal competence and
helpfulness in revenue collection as 97% of the respondents strongly agreed however
the complete implementation of the system was disrupted by the telecommunication
company’ s staff resistance to change.
The researchers used structured cross section survey to collect data where primary data
was collected through questionnaires. They concluded that investment in information,
communication and technology has a favourable outcome on revenue collection.
Hence researcher’ s major findings were that there is a strong relationship that exists
between revenue collection and information systems and concluded that investment in
electronic payment systems for Telecommunication company transactions reinforces
efficiency due to timely revenue collection.
An
Evaluation
of
Telecommunication
Companies
Revenue
Collection
Performance and Service Delivery: A Case Study of Vodafone Ghana Company
Limited in the Ghanaian. Goni. (2013).
T.N Moyo (2016) noted that this research study set out to evaluate the
Telecommunication Companies revenue collection performance and service delivery
in Ghana. The findings showed that revenue collection and service delivery go and
hand in hand. Descriptive, explanatory and associational research designs were used
to establish the relationship between the variables. Questionnaires, interviews and
observations were used to collect qualitative data while quantitative data was obtained
through computation and analysis. A direct link between service delivery and revenue
collection was finally unearthed and also indicated that the major failure in
Telecommunication Companies is poor revenue collection.
The Challenges of Self-Financing in Telecommunication Companies: The Case of
Telecommunications Companies in Zimbabwe, Gotora J. And Chamunorwa B.
(2013)
Gotora and Chamunorwa (2013) examined the self-financing efforts in
Telecommunication Companies against a backdrop in transfers from treasury. Results
indicated that Telecommunication Companies’ self-financing base was compromised
by limited revenue base, failure to devise long range revenue optimizing strategies and
political interference and other interlocking factors.
The research concluded that self-financing remains a daunting challenge and
contributing factors include increasing demand for service by local residents and other
stakeholders against revenue generating capacity and many more. The researches
major findings were that Telecommunication Companies are failing to self-finance
their operations which was evidently affecting service delivery due to the shrinking
revenue base which they have which is owed to the reliance on declining central
government financing among other factors and that there was need for there to be a
clear and transparent revenue sharing mechanism between the state and sub-national
structures.
Revenue Generation: Impact on Telecommunication Companies Development
Effort. A study selected Telecommunication Companies in Nigeria (2013).
Edogbanya and Sule (2013), mainly focused on the extent to which revenue generation
had impacted on the development of Telecommunication Companies. The research
obtained the following results; that there was a substantial association between revenue
generated and developmental efforts among Telecommunication Companies;
inadequate revenue to maintain the existing infrastructure, poor service delivery to
local areas and to the rural people. The researchers concluded that the spending
assignment should match with revenue generating powers in order for
Telecommunication Companies to discharge their functions properly.
Corruption in Zimbabwean Telecommunications Companies: A Case of TelOne
Mutare Branch Zimbabwe. J Lulu (2013)
Lulu (2013), identified corruption as a factor that affects service delivery and the study
was aimed at analysing corruption in its different forms, anti-corruption measures that
have been put in place, challenges faced in the implementation of these strategies and
what should be done to improve them. The researcher identifies corruption activities
that impact negatively on service delivery, which includes gross mismanagement of
Telecommunication Companies funds, bribing of Telone workers and misuse of
company assets.
The researchers revealed measures, which include internal and external auditing,
whistle blowing, punishing offenders and use of code of conduct among other
strategies. However, the study identified that the strategies have not been fully
implemented to make them totally effective.
The Challenges Facing Telecommunication Companies in Revenue Collection
and Utilization in Namibia. A Case of MTC Namibia Telecommunication
Companies. Ngekunga D.B (2012).
Ngekunga (2012) pointed out the extent to which revenue was collected and utilized
at MTC Namibia with an opinion to suggest remedial procedures. The study indicated
that Telecommunication Companies are facing problems of raising revenue and
highlighted some of the challenges as over employment leading to supervision
problems and poor budget formulation. Also, there was non-payment of bills by
residents and administrative problems such as corruption, lack of legal action on
revenue collection by telecommunication companies and poor revenue generation.
The major findings of the research were that Telecommunication Companies are
facing challenges in revenue collection which leads to poor budget performance. The
researcher concluded that non-payment of bills by residents and administrative
problems such as corruption, lack of legal action on revenue collection among others
contribute to revenue decline; hence telecommunications companies should improve
on revenue collection.
In all the studies mentioned above it is evident how Telecommunications Companies
in various countries are facing challenges in terms of revenue collection which in turn
affects service delivery. Issues to do with corruption, compliance levels and nonpayment of bills were highlighted as contributing factors to the decline in revenue in
telecommunications companies. Various suggestions were given to improve revenue
collection such as expanding internally generated revenue through investing in
electronic systems and minimising corruption so as to ensure effective and efficient
service delivery.
2.3.1 Lessons from Global Experiences
Greece
WR Drews et al (2013) noted that the bulk of Telecommunication companies funding
in Greece is from central government in the form of general-purpose grant and
government grants and subsidies followed by revenues from commercial (rates),
although the extent of self-financing varies across the country (Spotlight, 2010). The
telecommunications companies have more scope to raise revenue from commercial
billing. It should be noted that until 2009, Greece traditionally had no ADSL and FTTH
internet, scenarios saw the Telecommunications Companies (2009) making efforts to
widen the revenue base through the introduction of ADSL and FTTH internet
(domestic and commercial) and other financing measures such as selling consumer
premise equipment (handsets, modems, routers) and renting out idle premises owned
by the companies.
United States of America
Chinjekure et al (2013), elaborates on how telecommunications companies in America
have power to charge clients for the use of service and spend money and they mobilize
over 65 percent of their own revenues, the rest is either sourced from state and federal
governments. Intergovernmental transfers are in the form of grants (restricted and
unrestricted), state sales, income and gasoline tax revenues from sales. Decades have
also
witnessed
efforts by clients
to
restrict revenue-raising actions of
telecommunications companies by requiring that all local revenue raising actions
(voice and broadband) are approved by two thirds or more of clients. Major sources of
internal revenue include rentals and sales of consumer price equipment (Lambert;
2009).
2.3.2 Gaps in Literature
Effects of Revenue Decline
There has not been much research on the effects of revenue decline and how it has
impacted telecommunication companies in terms of their daily operations. Most
researchers have focused on the sources of revenue in Telecommunications
Companies, the
effects
of revenue decline
and how it
has
impacted
Telecommunications Companies in terms of their daily operations. Theca uses of
revenue decline, the causes of revenue decline or the challenges in revenue collection
and strategies of improving revenue. The effects or the impact of revenue decline or
the failure to effectively collect revenue in telecommunications companies have been
overlooked.
Some researchers have looked at the effects of revenue decline in the broader sense
and only generalized it to poor service delivery, however there are other effects which
should be noted which are being experienced by Telecommunications Companies and
these are seriously hampering operations internally. Revenue decline has affected
Telecommunications Companies budgets as what they would have budgeted for at the
beginning of the year does not match with the revenue they receive during the year
hence this affects service delivery.
Revenue decline has resulted in poor infrastructure development, which is owed to the
lack of funds to purchase or maintain infrastructure such telephone base stations, fibre
and copper cables and drop wires and a lot of revenue is being lost. Also,
telecommunications companies are failing to remit their statutory obligations to
various institutions such as ZIMRA and NSSA which has resulted in
telecommunications companies having their accounts garnished.
Moreover, decline in revenue has resulted in serious salary backlogs, which has seen
most telecommunications companies owing their employees over 6 months’ worth of
salaries and this has ultimately impacted telecommunications companies as is
evidenced by high staff turnover leading to the loss of competent staff and in some
other cases this has resulted in industrial action which disrupts service delivery. Also
decline in revenue has affected telecommunications companies as is seen how this
results in the decrease in the service delivery, which drives away potential investors.
Furthermore, researchers did not consider some factors, which are currently affecting
revenue collection in telecommunications companies, which are resulting in revenue
decline. There is lack of competence as some low-level employees are not skilled for
their jobs as they are recruited on the basis of political patronage hence this affects
their performance in executing duties in relation to revenue collection strategies. For
senior officials, some have been in acting positions for long time hence they lack
confidence to implement revenue enhancement strategies and they do not take hence
they lack confidence to implement revenue enhancement strategies and they do not
take responsibility in being effective towards service delivery. Also, customers are not
paying their dues to telecommunications companies as they no longer trust
telecommunications
companies
as
they
are
not
actually
seeing
what
telecommunications companies are doing with their monies in terms of service
delivery but at the same time this is also affecting the capacity of telecommunications
companies to provide services to the people.
2.3.3 Summary
This chapter looked at the views of other researchers regarding revenue in
telecommunications companies. The term revenue was defined and the chapter also
elaborated on the sources of income for telecommunications companies and the causes
and challenges of revenue decline. It also presented empirical evidence and global
experiences in terms of revenue collection. The chapter went on to present the gaps in
literature in terms of revenue and it was noted that the effects of revenue were not
discussed or researched in length. The next chapter looks at the research methodology
of how the research was conducted and the methods of data collection which was used.
CHAPTER 3 RESEARCH METHODOLOGY
3.1 Introduction
This chapter discusses the methods that were used to collect and analyse data. The
chapter gives an overview data of the Research design, target population, sampling
techniques, research instruments and the data collection procedure. The chapter ends
up by explaining the ethical considerations as well as data presentation and analysis.
3.2 Study Area
The research was done in Mutare urban. The respondents were drawn from the
following areas: TelOne Mutare Main Branch Offices and Mutare Town centre and
light industrial areas.
3.3 Research design
Borg and Gall (1989) offers that a research design is the plan and structure of an
investigation. Therefore, a research design can be thought of as a structure of research
which holds the elements of the project together. Meanwhile, Borg and Gall (2015)
offers that a research design is a general plan of how the researcher will go on about
answering the research questions. As such, a research design contains clear objectives
derived from the research questions, specifying sources from which the researcher
intends to collect data from and consider constraints that one will inevitably encounter.
In other words, a research design can be best described as a set of plans and procedures
that reduce error and simultaneously help the researcher to obtain empirical evidence
or data about isolated variables of interest. It goes further to explain and detail how the
research process is done. In this study of Causes of Telecommunications Companies’
Revenue Decline in Zimbabwe, making a case of Mutare Branch, both quantitative
and qualitative research designs shall be employed.
3.4 Qualitative Research Design
Qualitative research design is a generic term for investigative methodologies described
as ethnographic, naturalistic or participant-observer research (Longhurst, 1997). It
focuses on specific situations or people and emphasizes on the importance of looking
at variables in the natural setting in which they are found in. According to Walcerz
(2001), using qualitative research design brings out the advantages of providing
answers to questions raised as it focuses on the affected population as it gathers various
surveys.
Also, the objective of explorative research is to gather preliminary information that
will help define problems and suggest a hypothesis, (Kolter, 2006). The use of a
various instruments resulted in data triangulation which itself validated the findings of
the study by confirming or rectifying data sought through different instruments when
investigating issues concerning revenue decline. Qualitative research concentrates on
the way groups of people can have numerous ways of looking at reality and emphasis
on experiences, reports or data which cannot be conveyed statistically, (Hancock et al;
2009). The verbal and descriptive data was important as it helped to obtain accurate
information on the causes and effects of revenue decline at TelOne Mutare Branch.
3.5 Quantitative research design
Quantitative research design is used to permit statistics which quantifies the area under
study. Quantitative research was important as it helped to present findings clearly and
precisely using graphs, tables, frequency tables, histograms and pie charts. According
to Given (2008), quantitative research is the systematic empirical investigation of
observable phenomena via statistical, mathematical or computation techniques. The
researcher employed this design as it yielded an unbiased result that was generalized
to a larger population.
3.6 Study Population and Sampling procedure
3.6.1 Target Population:
According to Brink (1996), a population is the entire group of persons or objects that
are of interest to the researcher or meets the criteria that the research will explore. The
population represents the sampling frame from which the sample is drawn from,
(Saunders et al; 2003). A population is a collection of the observation of random
variables under study which one is trying to draw conclusions from and it is defined
in specific terms to include only those sampling units with characteristics which are
relevant to the problem, (Wegner, 2000).
The target population is the entire group which the researcher wishes to draw
conclusions on. Care must be taken not to generalize beyond the population. In this
study the target population were all the employees, managers and members of the
resident and stakeholders’ association of Tel-One Mutare branch. The choice of the
managers, employees and members of resident and stakeholders’ association was ideal
in that it is the staff members who are the focus of the study.
The identification of targeted population is important to ensure that it consists of
people who have relevant information sought by the researcher, (Lincoln et al 1995).
According to the report of the TelOne Mutare Branch on Human Resources of
November 2019, TelOne Mutare Branch has an establishment 95 employees. The
researcher used the following target population which included, 6 members of the
management team (heads of departments) and 8 members of the workers’ committee
who are part of the total establishment and 5 banking hall tellers and are also
responsible for the implementation of revenue enhancement strategies. The researcher
also targeted a population of 1000 members of Mutare residents and stakeholders out
of an estimated population of 300 000 people in Mutare because TelOne
communicated its intended revenue collections activities through associations like
these. The researcher. This is shown in table below:
Table 3.1 Target Population size:
Class
Population
Management Team
15
Workers Committee
25
Bank Tellers
5
Residents and other stakeholders’ association
1000
Total
1045
3.6.2 Sampling
Cochran (1997), defines sampling as the process of selecting units from a population
of interest to represent the whole population. Compelling reasons for sampling include
lower costs, greater accuracy of results and greater speed of data collection. The
importance of a sample is that it is representative, adequate and homogenous. Hence
the sampling is the range of some part of a comprehensive or totality on the foundation
of which a conclusion or intervention about aggregate is made.
According to Cherry (2010) a sample is finite part of the statistical population whose
properties are studied to gain information about the whole. Fridah (2011) defines a
sample as a sub – collection or sub – set of the population. Therefore, a sample is a
representative group drawn from a specified population used to make or draw
conclusions about characteristics of the population. When dealing with people it can
be defined as a set of respondents (people) selected from larger population for the
purpose of survey. In this study, the sample shall be composed of 6 members of
management team, 3 banking hall tellers, 8 members of the workers’ committee and
18 members of residents and stakeholders’ association.
According to Rosander (2001), “ a sample has many disadvantages over a census or
complete enumeration. If it is carefully designed, the sample is not only considerably
cheaper but may give results which are just accurate and sometimes more accurate
than those of the census. Hence a carefully designed sample may actually be better
than a poorly planned and executed census.” Sampling techniques are used to develop
an understanding of the issue through confirmation of assumptions and extension of
knowledge towards the subject of the research. The researcher used judgemental
sampling for the members of the Workers Committee, Management Team, Banking
hall and Residents and Stakeholders Association.
3.6.3 Sample Size
The sample population of this study consisted of members of the Management Team,
Workers Committee, members of Resident and Stakeholders’ Association and
Banking Hall thus ensuring a balanced opinion of the topic under study. From a
targeted number of 1045 people, population was divided into four strata and in the
sample size the researcher considered 3 members of the Banking Hall, 6 members of
the Management team, 8 members of the workers’ committee and 18 members of
residents and stakeholders’ association from the population giving us a total of 35
respondents. The researcher drew this population as it saved time and data collection
was manageable with fewer people being involved thus leading to higher overall
accuracy.
3.6.4 Judgemental sampling
According to Cohen (1980), judgemental sampling is the selection of elements to be
included in the sample on the basis of personal judgement. This sampling method was
used as it was appropriate for a limited number of experts in the area of study. Saunders
(2004), stated that judgemental sampling enables the researcher to use own
judgemental to select cases so as to get the questions and to meet the objectives. Kumar
(2000), adds on to say that a researcher purposively selects and leaves out some
respondents.
The researcher targeted 3 members of the Banking Hall who were representative of 5
as they are policy makers and influence the behaviour of the clients. The researcher
also targeted 6 heads of departments who were representative of management as they
are policy implementers and are concerned with implementing revenue enhancement
strategies. Hence from these two strata of the targeted population, judgemental
sampling was effective as the research targeted officials who were well versed with
knowledge and understanding of the area under study.
3.6.5 Simple random sampling
This is a process of selecting and obtaining a sample in such a way that every member
of the population has an equal chance of being selected. According to (Kothari 1984)
simple random sampling is also known as chance sampling or probability sampling
where each and every item in the population has an equal chance of inclusion in the
sample and each one of the possible samples, in case of finite universe, has the same
probability of being selected.
The researcher approached members of the workers’ committee, after the works
council meeting and used the hat system and assigned members on pieces of paper and
other pieces of paper were blank, which were picked pieces of paper with numbers
assigned to them were given the questionnaires to fill in.
Table 3.2: Population sample
Class
Population size Sample size
Sampling technique
Banking Hall Tellers
5
3
Judgemental sampling
Management Team
15
6
Judgemental sampling
Workers Committee
25
8
Simple random
sampling
Residents
and 1000
18
Stakeholders
Simple random
sampling
Association
Total
1045
35
3.7 Inclusion/ exclusion criteria
To accomplish the objectives of this research, the research participants will be limited
to TelOne managers, employees and residential clients and stakeholders’ association.
This is because they have enough experience in the credit control and revenue
collection of the firm to respond to questions that are related to the causes of revenue
decline at TelOne Mutare Branch.
3.8 Primary Data
According to Edmond (1998), primary data is something that originates from firsthand knowledge of the person or item referred to in the research. It is the original raw
data collected from a research currently being undertaken. Neiswanger (2009) states
that a primary source is a publication in which the data is published by the same
authority which gathered and analysed them. The advantage of primary data is that it
provides first-hand information which is more reliable. Information was obtained by
administering structured and unstructured questionnaires which were hand delivered
and collected by the researcher.
3.9 Secondary data
According to Dennis (1999), secondary data is collected from already existing records
that helps the researcher to come up with a historical background for the study. It is
also referred to as documentary data which is information of existing records which
was previously collected for other purposes. Neiswenger (2009) states that a secondary
source is a publication, reporting the data which was gathered by other authorities and
for which others are responsible.
Livesey (2006), adds on to say that understanding secondary sources of data includes
the researcher using the already available data which had been produced by other
researchers. In this research, the researcher used journals, past and current newspapers,
reports and TelOne minutes which had necessary information for this research and
they were compared so as to come up with ideas, analyses and recommendations.
Secondary data was therefore less expensive as it was found in one place either within
the organisation from its TelOne minutes and reports, the Africa University library or
on regularly updated websites.
3.10 Data Collection Procedures
The researcher sought permission from the relevant authorities at TelOne Mutare
Branch. This was done in compliance with research ethics which bids a researcher to
seek permission from responsible authority before proceeding with the research. This
is done so as not to invoke fear into the participants who will be disclosing the
information, they have concerning the questions under study by the researcher. The
researcher kindly introduced himself to the participants as an Accounting student at
Africa University conducting an academic research on the mentioned topic. The
researcher clearly explained that the research was merely meant for academic purposes
only. To those who wanted to retain anonymity the researcher did not force or use their
names without their knowledge as the researcher was obliged to follow research ethics
and to uphold the rights of the participants.
3.11 Data Collection Instruments
3.11.1 Research instruments
Research instruments are tools used by the researcher to collect data that is related to
the research problem, (McLead, 2014). According to Lamm and Schaefer (2002)
research instruments are used to collect data when carrying out a research. Research
instruments can be either interviews, questionnaires, observation and others to collect
data. In this study, two research instruments which are interview and questionnaires to
obtain the desired information about the causes of Telecommunications Companies
Revenue’ s Decline in Zimbabwe: A case of TelOne Mutare Branch.
3.11.2 The Questionnaire
Questionnaires are a set of questions which can be answered by targeted respondents
of the research through various means that is either face to face interviews or a selfcompletion of structured or unstructured questions on paper, (Payne et al; 2004).
Generally, questionnaires consist of three sections namely the administrative section
which records such information as the date, name and place of interview for both the
interviewer and respondent. The second section describes demographic information
about the respondent’ s gender or age, residential location, marital status, language
among other things. The last section focuses on the major issues about the whole body.
The researcher conducted questionnaires with TelOne managers, employees and
residential clients and stakeholders’ association to gather data on the Causes of
Telecommunications Companies’ Revenue Decline in Zimbabwe at TelOne Mutare
Branch. McLead (2014) defined a questionnaire as a data collection instrument or
document which contains questions to solicit appropriate information for analysis. The
choice of the questionnaire as the prime data collection method is ideal because it
allows that researcher to collect a wide variety of data from several people within a
short time. It also enabled the participants to answer questions without the researcher`s
interference thus giving them ample time to analyse the questions critically before
answering which enhanced truthful answers. The instrument also allows
confidentiality as identity of the respondents and the data they give will be protected.
The questionnaire composed of 8 questions divided into divided into two parts, Part 1
and Part 2. Part 1 shall involve personal demographic data. Part 2 for objective one to
three.
According to Annum (2014), there are basically two types of questionnaires which are
closed and open-ended questionnaires. Closed ended questionnaires are answered in
short and the answers mostly will be provided requiring just to tick on the appropriate
relevant answer according to the respondents’ view. For the purpose of this research
the use of closed questions clarified the meaning of a question to respondents by the
availability of answers.
Open-ended questions allowed respondents to provide answers in their own expression
and opinions and to make their inputs on the spaces provided on the questionnaires.
The researcher chose to use these because they were convenient to use for the members
of the residents and stakeholders’ association, workers’ committee, heads of
departments and banking hall tellers as they ensured participants did not disclose their
identity and that they had no fear of being victimised or intimidated after providing
their views. The researcher constructed questionnaires which were composed of
simple and direct questions.
Merits
It allowed for involvement of a large number of people such that it provided a lot of
information. It allowed for the uniformity of questions making data easy to compare
and analyse. It allowed for the collection of data in large quantities hence it was cheap
and time saving.
Demerits
Some officials refused to give information; information was difficult to compile as it
involved figures and some questionnaires were not returned.
3.11.3 Interviews
According to Polit et al (1991), an interview is a means of gathering data by interaction
between an interviewer and interviewee. They are closely related to questions although
interviews are an independent entity. One on one interviews give more information as
the interviewed people can elaborate more on issues being asked.
However, in some cases some respondents may be sensitive and emotional hence the
researcher conducted structured and semi structured interviews. Face to face
interviews were conducted with selected participants from the Banking Hall Tellers,
Heads of Departments, Workers Committee and Resident and Stakeholders’
Committee and this allowed the researcher to get first-hand information, which was
not biased. Also, this allowed for easy interpretation of some issues through other
forms of register, body language and facial expression used by the respondents.
3.12 Pretesting
After the researcher was done with designing the research instruments, there was need
to test them prior to the actual data collection. Kumar (2011) noted that pre-testing is
a process that entails preliminary and critical examination of getting to understand
aspects in research instrument and the meaning as understood by the respondents.
Interviews and questionnaires designed for this research underwent pre-testing and the
following was hoped to be achieved:
Coming up with estimated time, budget and resources which will be required for the
research; Establishment of research procedure and workability; Making adjustments
after identification of ambiguities and irregularities in the research instruments;
Determining if the research will be successful or not and the reasons for it to be
successful or not and; Gathering preliminary information and measuring the proposed
analyses techniques of data.
The first thing the researcher did was to go through the questions for the interviews
and questionnaires with the help of a classmate which allowed the researcher to take
note of the problematic words or questions. After that the researcher conducted the
pre-test and asked for the assistance of the Administration Officer at TelOne Mutare
Branch, who was not part of the same population but had relevant knowledge on the
organisation and topic under study. By so doing this helped the researcher to get a
better idea of how the sample was going to really react.
3.13 Validity
Validity is concerned with whether the findings are really about what they appear to
be. According to Saunders et al (2009), validity is the extent to which data collection
methods accurately measures what they were intended to measure. Also, validity can
be defined as the extent to which a test measures what it is supposed to measure and
also the appropriateness with which inference can be made on the basis of the test
results. Hence validity is in terms of how an instrument actually measures the concept
in question and whether the concept is being measured accurately. In order to
incorporate validity in the study, the researcher ensured that each question was related
to the problem and that it was going to achieve the objectives of the study.
3.14 Reliability
Reliability refers to the degree to which data collection methods will yield consistent
findings, (Saunders et al; 2009). The reliability of a research instrument is concerned
with the extent to which it yields the same results on repeated trials. According to
Litwin (1995), reliability is a statistical measure of the reproducibility of the survey
instruments data. Hence reliability refers to stability, consistency, accuracy and
dependability of the instrument. To ensure that research instruments were reliable the
researcher formulated questions that cover the content of each objective.
3.15 Data Presentation and Analysis
In presenting the data the researcher used tables, graphs and pie charts. These tools are
much easier to use as methods of data presentation and they are easy to understand and
interpret. Complementing these methods of data presentation is data analysis whereby
an explanation is given concerning the data presented.
According to Taylor (2007), gathering data is not an end on itself therefore it must be
analysed and observed to see what data it can present out of it. Densombe (2007), adds
on to say that the main format for presenting qualitative data is narrative in nature
therefore it needs to be supported by evidence from raw data which can be presented
as direct quotes, or paraphrased to support and illustrate themes.
3.16 Ethical Considerations
This refers to the moral standards that the researcher should consider in all research
methods in all stages of the research design. According to Fower (1984) ethics are a
moral set of laws and codes of conduct used in the gathering, examination and
publication of researched information. Ethical research standards help to promote the
aims of the research which include truth, knowledge and avoiding errors as they
prohibit against misrepresentation of information, fabrication and falsification.
The research should ensure that participants’ names or personal details and individual
opinions will not be used for any other business but for academic purposes only.
Benater (2001), adds on to say that it is vital to include the interests of the whole
population and that there should be consideration of the concepts of rights, autonomy
and respect. Hence the research took into account all necessary steps that ensured
confidentiality in the collection of information from respondents in the study.
3.17 Summary
This chapter focused on how this research was carried out and described all the
activities that were carried out throughout the research process. For the purpose of this
study the researcher used both qualitative and quantitative research designs.
Qualitative research design ensured flexibility in that it is was descriptive and
quantitative research design helped to clearly and precisely present findings through
the use of graphs, frequency tables and pie charts. The participants for the study were
selected from the Banking Hall Tellers, Workers Committee, Management team
(Heads of Departments), and resident and stakeholders’ committee. The researcher
employed the use of interviews and questionnaires and ensured that the information
was valid and reliable. The next chapter was centred on data presentation and analysis
and interpretation of the research.
CHAPTER 4 DATA PRESENTATION AND ANALYSIS
4.1 Introduction
This chapter presents an analysis and interpretation of the results that were obtained
from the questionnaires, interviews and document analysis. Since qualitative and
quantitative techniques were used in gathering data, this study also uses a mixed
approach in presenting and analysing data. This implies that quantitative visual
representations of findings in the form of tables, graphs, pie charts and other
illustrations. These are supported by qualitative descriptive quoted from interviews
and documents. The findings in this chapter are grouped into themes which are used
as topics.
4.2 Data Collection Process
The questionnaires were administered at Mutare in areas such as the light industry
areas where members of the resident and stakeholders’ association are employed and
at TelOne works yard located next to ZINWA along the Beira road in Mutare were
workers’ committee are stationed. The interviews for the Management Team and
Banking Hall Tellers were conducted at the TelOne Mutare Exchange. The steps below
were taken by the researcher to collect the data in the field:
1. The researcher sought for permission to carry out the study and permission was
granted by the Area Business Manager.
2. The researcher handed out questionnaires to members of the Workers
Committee and Residents and Stakeholders Association.
3. The researcher then went on to conduct interviews with Banking Hall Tellers
and Management Team.
4. The researcher collected the questionnaires and then compiled the information
that had been obtained from the field from the questionnaires and interviews.
4.3 Response Rate
This gives the researcher the opportunity to assess the relevance of the results from the
field so as to come up with the percentages of the respondents who were able to
respond. This facilitated the analysis and presentation of data, which was collected. A
high response rate indicated the researcher’ s ability to successfully administer
questionnaires and to conduct interviews and thus coming up with meaningful
information.
4.3.1 Questionnaire Response Rate
The questionnaires used in this research were self-administered by the researcher and
this helped the researcher to get responses faster and the respondents were able to ask
for clarification when they were completing them. A total of 16 people were given the
questionnaires, that is 8 members of workers’ committee and only 6 were returned and
18 for residents and stakeholders associations and 13 were returned. Hence from the
entire targeted sample not all the respondents participated due to lack of time as some
of them were busy and concentrating on their daily business. Table 4.1 illustrates the
response rate for the questionnaires:
Table 4.1 Questionnaire Response Rate
Group targeted
Members
Questionnaires
Questionnaires
Response rate
administered
returned
%
6
75%
13
72%
of 8
Workers
Committee
Resident and
18
stakeholders’
committee
Table 4.1 gives a summary of the response rate for the questionnaires that were handed
out to the participants. From the above table one can see that for the members of the
workers’ committee, 8 questionnaires were administered and only 6 were returned to
the researcher for compilation thus representing a total response rate of 75%. The other
questionnaires were not returned due to the work commitments that the respondents
had and thus they failed to fill in and return them. The response rate for residents and
stakeholders’ association was 72% as 18 questionnaires were administered and only
13 were returned. The other questionnaires were not returned because the respondents
had lost them. Hence the overall representation of the targeted respondents constitutes:
75% + 88% /2 = 74%
According to Punch (2008) cited in Chabata (2019), response rate of 50% is generally
a representation of the population and any percentage lower than that proves to be
biased and not fully representative of the entire population. The overall response rate
of 74% justified the basis of creating conclusions and recommendations for this
research.
4.3.2 Interview Response Rate
The researcher used interviews for the study to obtain primary data, which is much
faster. Interviews allowed the researcher to get in depth information, as the interviewer
was able to ask more questions other than those on the interview guide. A total of 9
people were supposed to be interviewed, that is 3 banking hall tellers and 6 members
of management team (heads of departments). Hence from the entire targeted sample
not all the respondents participated due to lack of free time as some of them were busy
attending to meetings. The following table illustrates the response rate for the
interviews:
Table 4.2 Interview Response Rate
Grouping
Targeted
Actual responses
Response rate %
6
5
83%
3
3
100%
responses
Members of
management team
Banking Hall
Tellers
The responses for the interviews were generally high especially with regards to the
banking hall tellers. From a targeted number of 3 banking hall tellers the interviewer
managed to interview the threes members who positively responded to the interview
questions thus representing 100% response rate. As for the members of the
management team, from a targeted population of 6 people the interviewer managed to
interview 5 people that is the Business Performance Supervisor- Billing and
Receivables, Associate Credit Control Supervisor, Associate Final Accounts
Supervisor and Associate Revenue Supervisor. The interviewer failed to get hold the
Associate Client Service Supervisor, as he was busy attending to regional business.
The response rate for the management team is 83%. Hence the average response rate
for interviews is:
100% + 83% /2 = 96%.
The overall response rate of 96% justified the basis of creating conclusions and
recommendations for this research.
4.4 Research Findings
4.4.1 Sex Demographics
The research reflected that greatest number of respondents at TelOne Mutare Branch
were males from both interviews and questionnaires and they constituted 81% of the
sample population whilst the females constituted 19%.
19%
81%
Males
Females
Figure 4.1 Interview response rate
The information above shows that males are still dominant in the employment industry
and many public offices. This is evidenced by how all the heads of departments were
interviewed in the research were only males which shows how males dominantly hold
top positions and have a greater influence than women in terms of the day to day
running of the company hence management is not gender sensitive in terms of
representation which affects policy formulation and implementation in relation to
revenue generation.
4.4.2 Academic Qualification
40%
30%
15%
10%
5%
NONE
CERTIFICATE
DIPLOMA
DEGREE
MASTERS
Series 1
Figure 4.2 Academic Qualification
In the study respondents comprise of 10% who do not have any academic
qualifications, 30% with certificates, 40% with diplomas, 15% with degrees and 5%
with masters. The population has a high level of education as most of the respondents
have diplomas and certificates hence, they have an appreciation of the subject. Thus,
the researcher found useful responses from the respondents in relation to revenue
decline at TelOne Mutare Branch.
4.4.3 Work Experience for Members of Management
There were 5 members of management who were interviewed and their work
experience is illustrated below:
0
20%
40%
40%
Below 1 year
Between 5- 10 years
Above 10 years
Figure 4.3 Work Experience for Members of Management
There was one of members of Management that is the Associate Credit Control
Supervisor who has been in the organisation since August 2019 as he was recently
appointed to his position, which has been vacant for some time. His work experience
constituted to 20% of the total sample and this proved that he has not been with the
organisation for a long time for him to actually relate some of the challenges in the
organisation, which has been contributing, to revenue decline. The percentage for
those between 5- 10 years is 40% and this includes the Associate Final Accounts
Supervisor who has been recently promoted to that post, as he was part of middle
management as Assistant Associate Credit Control before and Associate Client
Services Supervisor. Hence their work experience is sufficient enough for the subject
under study. Lastly there were members of management who have been with the
organisation for over 10 years that is the Associate Revenue Supervisor and the
Business Performance Supervisor- Billing and Receivables and they contributed to
40%. Their work experience is therefore valuable as they are well equipped with the
knowledge of the organization and are well versed with the topic under study.
4.5 Source of Revenue
The information collected from the questionnaires revealed the following sources and
their contribution to revenue at TelOne Mutare Branch: voice 24%, broadband 30%,
satellite 15%, income generating projects 13%, borrowings 7%, data centres and cloud
computing 5%, installation and monthly rental fees 6%. This is illustrated below:
0.35
PERCENTAGE
0.3
0.25
0.2
0.15
0.1
0.05
0
Series 1
SOURCESOF REVENUE
Figure 4.4 Sources of Revenue
The bar graph above shows that most of the respondents pointed out that broadband
was the major source of revenue for TelOne Mutare Branch and Rondinelli et al (1993)
states that broadband have the potential improving revenue as consumers pay for what
they use thus reducing wasteful usage in resource allocation. Voice is rated second as
income comes in the form of prepaid and post-paid payments. Satellite is rated third
and it contributes 15%, and Coutinho (2010) reiterates that satellite if properly
managed can be the main source of funding for Telecommunication Companies
activities. Borrowing has 7% as the government has since stopped giving
telecommunication companies grants to subsidize what they receive from its own
revenue sources. The percentage of income-generating projects is lesser as is
evidenced by TelOne Msasa Factory project which was one of the TelOne’ s major
income-generating project was shut-down and Coutinho (2010) states that some of
these ventures to generate revenue are underperforming due to abuse of
telecommunication properties and assets by both workers and management.
The information also gathered from the interviews substantiates the data from the
questionnaires as the respondents from the management team also highlighted
broadband as their major source of revenue. They also mentioned voice, satellite and
income generating projects as major sources for the telecommunication company.
They highlighted how they were also receiving revenue from data centres and cloud
computing; installation and monthly rentals although at minimal levels. They
mentioned that VoIP was one area that could boost their revenue and as Coutinho
(2010) emphasizes on the fact that VoIP can be viable source of income for
telecommunication companies, however TelOne Mutare Branch is not receiving much
revenue from that source as people are not finishing up their payment instalments.
4.6 Causes of Revenue Decline
The study revealed that the respondents viewed corruption as the major cause of
revenue decline as it contributes to 25%, followed by economic decline, which is 22%,
poor billing system 19%, political influence 8%, competition from other service
providers 7%, foreign currency shortages and price hikes 4%, network vandalism 6%,
power blackouts 5% and resistance to pay by customers which is 4%. This is illustrated
below:
economic decline
political influence
8%
25%
22%
7%
4% 5%
19%
6% 4%
corruption
resistance to pay by customers
network vandalism
power blackouts
foreign currency shortages and price
hikes
competition
Figure 4.5 Causes of Revenue Decline
Corruption constitutes a larger percentage for the causes of revenue decline as
highlighted by the workers’ representatives and residents and stakeholders’
association. This is against a background where it has been alleged that there are
corrupt activities such as mismanagement of funds as is evidenced by how it was
alleged that the top management officials were embarking on unfruitful expenditures
such as study tours thus this contributes more as people assume the decline in revenue
is owed to management. Chishakwe (2002) supports how corruption leads to revenue
decline as funds earmarked for development purposes are often diverted towards other
things, which do not benefit the telecommunication community as a whole.
Secondly, there is economic decline, which is also affecting telecommunication
companies and Ndlovu et al (2005) asserts that telecommunications companies are
failing to raise sufficient revenue as a result of the failing economy. This has resulted
in the closure of industries leaving a lot of people unemployed and unable to settle
their bills, as they do not have disposable income to pay bills to the telecommunication
company. It is followed by poor billing systems whereby statements are not given out
on time hence people tend to relax in paying bills when they do not receive their
statements on time. Also, when bills do not arrive on time people end up paying their
other bills instead of prioritizing on paying what they owe to Telecommunication
Company. Also, people do not like long queues in banking (revenue) halls this results
in them being reluctant to pay their bills. The research conducted by Otieno et al
(2013), concurs with the fact that the absence of electronic payment systems in
telecommunication companies affects revenue collection hence there is a need to
invest in information systems to improve revenue collection.
Political influence is another contributing factor as a lot of people who are anticipating
for the repeat of the 2013 of the Ministerial directive, whereby the former Minister of
Minister of Information Technology and Courier Services issued a directive for
telecommunication companies to write off debts owed by customers however this left
an enormous and crippling debt burning for the telecommunication company as its
revenue inflow was affected thus resulting in revenue decline. The management also
substantiated in the interviews how the political situation is also affecting the
telecommunication company’ s capacity to generate enough revenue to carry out its
activities. They elaborated on how party politics is affecting the implementation of
sound policies to improve revenue as there is no unity between heads of departments
and workers’ committee as is shown by how they undermine each other’ s authority.
Cohen (2010) supports this view as he states that whenever there are different political
policies with different political ideologies in the telecommunication companies, the
chances of reaching common consent is reduced to a minimum. It is also alleged that
some heads of departments tend to drift from their responsibilities as they formulate
policies to impress their elaborates rather than crafting policies, which contribute to
the improvement of revenue inflow and better service delivery.
Lastly there is resistance by the customers, as they now no longer trust the
telecommunication company to provide services, as they are not receiving value for
their money. The respondents from the residents and stakeholders’ associations also
pointed out that customers now have mistrust with the telecommunication company in
terms of the failure to provide services hence they are now unwilling to pay their bills.
They reiterated that people pay their bills when they have confidence and the moment
you erode confidence they do not pay. Hence the customers have lost trust with the
telecommunication company especially as a result of the alleged charges of
mismanagement of funds levelled against the telecommunication company thus
contributing to their resistance in paying their bills. This is in line with view of Mclean
et al (2008) who pointed out how the financial performance of telecommunication
companies is affected by the capacity and compliance of customers to pay services.
However, information gathered from interviews brought to light other factors that are
causing revenue decline. The members of the management team reported that there is
a dilemma amongst consumers due to the introduction of bond notes and the Zim dollar
in the country hence people are not paying their bills but holding onto their US dollars
for trading purposes. They also explained on how the suspension of brand ambassadors
(sales reps) has affected revenue collection, as there are no more brand ambassadors
at the moment representing their respective exchanges. However, all the exchanges are
not represented by anyone and there are no development meetings taking place so as
to encourage residents and other stakeholders to pay their bills. So, the residents are
not in touch with their respective brand ambassadors who are supposed to take note of
their needs and find ways to ensure adequate service delivery. Gono (2006), also
elaborates with this as he states that the lack of adequate communication between
telecommunication companies and stakeholders’ stalls progress in most cases.
Moreover, they stated that due to lack of funds to repair and maintain equipment such
as boosters, wire cables, satellites at base stations a lot of non-revenue voice and
broadband is being lost before it gets to the system. Also, there are tendencies of
vandalism of network that is drop wires, copper and fibre cables hence TelOne is
supposed to receive revenue through service delivery, its actually losing a lot of money
thus contributing to revenue decline. They elaborated on how the billing system at
TelOne Mutare Branch is archaic and slow thus resulting people receiving their
statements late making them relax in paying telephone bills. Lastly, the absence of
qualified personnel at key positions has also caused revenue, as those on acting
capacity are not able to make decisions, which are permanent and could improve the
problem of revenue decline. The DigiWorld Economic Journal (2018), substantiates
this point by highlighting that, the lack of skills and ability to manage the collection of
debt has affected the financial performance of many telecommunication companies.
The Workers Committee went on to add that there was poor management which was
resulting in the dishonesty by those who handle funds thus contributing to revenue
decline.
4.7 Effects of Revenue Decline on Employees
The table below shows that late salary payment constitutes 33%, inadequate resources
24%, failure to receive benefits 25% and job insecurity 18%.
Series 1
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
late salary
payment
inadequate
resources
failure to
receive
benefits
job insecurity
Figure 4.6 Effects of Revenue Decline on Employees
From the illustration above one can see that employees at TelOne Mutare Branch are
mostly affected by late salary payment. Due to revenue decline there is now a huge
salary and overtime allowance backlog and employees are not being paid on time
hence this is a major factor affecting employees at TelOne Mutare Branch. Information
gathered from the interviews also revealed that there was a decrease in employee
morale as is evidenced by how their performance has decreased, as they are not
receiving remuneration on time. Fjelstad (2000), reiterates on how the absence of
incentives for staff affects their performance and demotivates them. This even saw
employees embarking on an industrial action, which greatly affected TelOne and its
effects, could still be felt up until now.
It is then followed by inadequate resources which is a result of revenue decline as the
telecommunication company is failing to purchase equipment and materials such as
protective clothing, motor vehicles for technicians to carry out their duties and this
reduces efficiency.
The income they are receiving is not matching with the budgeted expenditure thus
affecting the overall budgeting process. Sule et al (2013) highlights how there is a
relationship between the revenue generated and the expenditure incurred thus if the
income is less telecommunication companies then fail to purchase equipment and
materials to use towards service delivery. Employees are also not receiving benefits
on time in terms of medical aid and funeral cover, as the telecommunication company
is financially incapacitated. Lastly there is job insecurity as most low-level employees
constitute a larger number of the workforce hence there is fear that management might
resort to retrenchment as a way to relieve pressure on the telecommunication company
in terms of remuneration.
4.8 Effects of Revenue on the Organisation
The effects of revenue decline on the organisation constituted the following
percentages: decline in service delivery 27%, salary backlog 25%, garnishing of
telecommunication accounts 20%, downsizing 16% and industrial action 12%. This is
illustrated below:
12%
decline in service delivery
27%
salary backlog
16%
garnishing of telecommunication
accounts
0
downsizing
20%
industrial action
25%
Figure 4.7 Effects of Revenue Decline on the Organisation
The illustration above shows that the major factor affecting the organisation as a result
of revenue decline is decline in service delivery. Tekere (2006) highlights how the
performance and operating conditions of many telecommunication companies has
become increasingly difficult and this is as true as it is evidenced by the late response
to network faults or vandalism, long waiting list for new installations and late delivery
of telephone bills among others. This is closely followed by salary backlog, which
constitutes 25% and is evidenced by how employees have gone for 3 years without
receiving their overtime salary.
Documentary information from the TelOne’ s monthly reports from the Finance and
Manpower Committee revealed that the telecommunication company is failing to
finance recurrent expenditure especially in terms of salary payment, as there is huge
salary backlog and it was highlighted that top management are 8 months behind,
middle management are 7 months behind and shop floor employees are 6 months
behind salary payments.
Also, revenue decline has resulted in the garnishing of telecommunication accounts by
institutions such as ZIMRA and NSSA as TelOne is failing to remit its statutory
obligations to these institutions. Downsizing has also taken place as a result of revenue
decline as the telecommunication company could not manage to continue paying the
large workforce. This was done through terminating the contract of employment for
contract employees. Lastly the organisation was once affected by industrial action,
which saw operations at TelOne coming to halt in 2015, as employees were demanding
their salaries. Even up until now the effects of that industrial action can be felt although
at a minimal level as there is still mistrust between management and worker
representatives.
4.9 Frequency of Payment of Bills by Consumers
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
always
sometimes
never
Series 1
Figure 4.8 Frequency of Payment of Bills by Consumers
From the illustration above one can deduce that only a few people constituting 10%
always pay their bills. This is a very small percentage considering a population of
about 300 000 subscribers in Mutare, (TelOnestats 2012), thus it shows that this is the
number of people who form the telecommunication company revenue backbone. This
is followed by those who sometimes pay their bills and this shows that they are
seasonal as they at times pay their bills or do not pay. This could be attributed to the
issue of property ownership whereby those who at times pay are actually own the
telephone and the broadband (ADSL/ KA Band) hence they honour their bill payments
and those who at times do not pay might be tenants. Mclean et al (2008), also supports
this fact as they point out how revenue collection is affected by the capacity and
compliance of consumers.
Hence this trend results in the fluctuation of revenue inflow thus contributing to
revenue decline. Lastly there are those who never pay their bills and this is attributed
to those who are anticipating for the repeat of the 2013 Ministerial directive, which
saw all telecommunication companies instructed to cancel all outstanding debts.
Cohen (2010) also substantiates on how politics affects revenue collection strategies
of telecommunication companies hence contributing to the decline in revenue inflow
as is evidenced by how consumers are unwilling to pay their bills in anticipation of the
repeat of slashing of bills by the government.
4.10 Alternative credit control techniques that would improve revenue
collection
The table below shows the alternative credit control techniques that would improve
revenue collection if implemented by TelOne Mutare Branch.
Table 4.3: Alternative credit control techniques that would improve revenue
collection
Online Billing system
improves revenue collection
Letters and Emails acts as
reminders for prompt
payments
Debt Factoring enhance
revenue collection
Interest on overdue
payments improve revenue
collection
Credit Policies ensures
adherence to payments on
time
Systematic Follow ups
enhance revenue collection
Strongly Disagree Neutral
Disagree
0
0
0
Agree
0
Strongly
Agree
19
0
0
0
0
19
0
0
0
2
17
0
0
0
0
19
0
0
0
0
19
0
0
0
0
19
The table shows that most of the respondents which are 19 out of the 26 respondents
strongly agree that the credit control techniques implemented by other countries if
implemented by TelOne Mutare Branch would improve revenue collection. These
techniques include the online billing system, letters and emails which acts as reminders
for prompt payments and introducing credit policies to ensure payments are done on
time. This supports the study done by James (2014) who stated that a favourable credit
control policies would contribute to improved liquidity position. Moreover, it supports
the study done by Li (2004) who stated that online billing system ensures that fast and
prompt payments as well as efficient data capturing.
4.11 Alternative credit control techniques that would reduce cost of revenue
collection
The table below shows the alternative credit control techniques that would reduce cost
of revenue collection if implemented by TelOne Mutare Branch.
Table 4.4: Alternative credit control techniques that would reduce cost of
revenue collection
Online Billing system
reduces costs of revenue
collection
Letters and Emails acts as
reminders for prompt
payments
Debt Factoring enhance
revenue collection
Interest on overdue
payments reduces costs of
revenue collection
Credit Policies ensures
adherence to payments on
time
Systematic Follow ups
revenue collection
Strongly Disagree Neutral Agree
Disagree
0
0
0
0
Strongly
Agree
19
0
0
0
0
19
0
0
0
2
17
0
0
0
0
19
0
0
0
0
19
0
0
0
0
19
The table above shows that most of the respondents which are 19 out of the 26
respondents strongly agree that the credit control techniques implemented by other
countries if implemented by TelOne Mutare Branch would reduce cost of revenue
collection. These techniques include the online billing system, letters and emails which
acts as reminders for prompt payments and introducing credit policies to ensure
payments are done on time. This supports what Gatuhu (2013) pointed out stating that
technological advancement in terms of record keeping reduces cost of revenue
collection.
4.12 Efforts Made by Residents So Far Towards Revenue Enhancement
The management team highlighted that although there are still those who resist paying
their bills but there has been vast and unwavering support from the consumers
evidenced by how the revenue inflows have improved compared to the previous years
where revenue had drastically declined. They mentioned that regardless of the
economic challenges being faced by everyone, also, the residents have been
encouraged to come with the little that they have to make payment plans and they have
been responsive. This is in line with the strategies highlighted by Hofer (2009),
whereby he states that telecommunication companies should conduct public
enlightened and campaigns that will educate and encourage the consumers on the
importance of prompt payment.
4.13 Policies in Place to Improve Revenue
The management highlighted several policies, which they are currently implementing
so as to improve revenue at TelOne Mutare Branch. They mentioned the introduction
of total place concept whereby the telecommunication company adopts a system
whereby people are served in a transparent and efficient manner so as to reduce cases
of corruption thus ensuring that there are no revenue leakages and as highlighted by
Hofer (2009), for effective revenue generation, transparency and accountability should
be ensured. They also stated that they are inculcating a culture of leadership by
example, which should start from the top cascading down so that the whole
organisation is in sync thus castigating corruption.
Furthermore, they stated that they have introduced cost cutting measures on areas such
as travelling and subsistence, which has been cut to 27%, and also an embargo on
unnecessary travelling. Also, they mentioned how that they have downsized on
contract employees to solve the problem of revenue decline and are now emphasizing
on efficiency and effectiveness of permanent workers. Moreover, they pointed out how
they have improved the collection of revenue through introducing the prepaid system
payment mode and swiping system in revenue hall and, which will be convenient
enough for clients to pay their bills since there are cash shortages in the country.
Fjelstad et al (2000) supports this by saying that improving the billing system can
enhance revenue base of TelOne. Lastly, they mentioned how they have brought sanity
in terms of disciplinary and stability which was once disturbed by the industrial action
and they have created confidence among workers as is evidenced by how they are now
reporting for work.
4.14 How TelOne Mutare Has Gone in Improving Revenue Inflows
The TelOne administration mentioned that they have gone a long way in improving
revenue as from August 2018 TelOne was receiving 1.1 million in revenue but they
have upped the stakes from the proceeding months to 1.7, 1.6 and as of August 2019
they have gone as far as 2.1 million. They concurred that these improvements are owed
to the efforts that have been made through the assistance of the workers and
management.
4.15 Summary
This chapter showed how the researcher presented the data collected from the field
through graphs, tables and pie charts. The data presented in this chapter was gathered
from questionnaires administered to the members of the workers’ committee and the
residents and stakeholders’ association. Also information was gathered through
interviews conducted with members of the banking hall tellers and management team.
The findings pointed out the main sources of revenue, causes of revenue decline and
effects of revenue decline at TelOne Mutare Branch and the possible solutions
suggested by the respondents. The following chapter provides a summary for the
previous chapters and recommendations, and conclusions for the whole study.
CHAPTER 5 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
The study focused on the Causes of Telecommunication Companies’ Revenue Decline
in Zimbabwe, with particular attention on TelOne Mutare Branch. It brought to light
the major sources of revenue, and the causes and effects of revenue decline at TelOne
Mutare Branch. In this chapter, a summary of the whole research project is outlined
and conclusions and recommendations are drawn from the research findings.
5.2 Discussion
The research was prompted by the evident decline in revenue inflows in most of the
telecommunications companies in Zimbabwe as the traditional sources of revenue
have gone dry and this has heavily impacted on their performance. Chapter 1 of the
study introduced the background of the study, statement of the problem, objectives and
research questions, which guided the study. The statement of the problem pointed out
how TelOne Mutare Branch is failing to provide adequate services to the people as
evidenced by poorly maintained base stations and poor response in terms of service
delivery. It also highlighted how TelOne Mutare Branch as an organisation was
performing poorly as a result of revenue decline. Thus the researcher sought to
investigate the sources of revenue, causes and effects of revenue decline and to come
up with possible solutions to improve revenue at TelOne Mutare Branch. The
researcher also provided the justification for the study, delimitations and limitations.
The researcher went on to review literature in Chapter 2 which focused on the views
of other researchers regarding revenue in telecommunications companies. The term
revenue was defined and an elaboration on the sources of income for
telecommunications companies and the causes and challenges of revenue decline were
given. The sources of revenue for Telecommunications companies were established as
income earned from voice services, broadband, government grants, VoIP, loans, and
borrowings amongst others.
The researcher identified the following causes of revenue decline; poor billing, nonpayment by clients, corruption, political environment, lack of skilled expertise and
poor economic conditions. It also presented empirical evidence and global experiences
in terms of revenue collection. The Chapter went on to present the gaps in literature in
terms of revenue and it was noted that the effects of revenue decline were not discussed
or researched in length.
In chapter 3 the researcher focused on how the research was carried out in the field.
For the purpose of this study the researcher used both quantitative and qualitative
research designs. Qualitative research design ensured flexibility in that it was
descriptive and quantitative research design was also helpful to clearly and precisely
present findings through the use of graphs, frequency tables and pie charts. For data
collection the researcher employed the use of questionnaires and interviews. A sample
size of 35 participants was chosen included, members of the management team,
workers’ committee, banking hall tellers and resident and stakeholders’ association.
Pilot tests were carried out beforehand to ensure the reliability of the research
instruments and ethical issues were considered to ensure the wilful participation of the
respondents.
Chapter 4 showed how the researcher presented the data collected from the field
through graphs, tables and pie charts. The data presented in this chapter was gathered
from questionnaires administered to the members of the workers’ committee and the
members of the resident and stakeholders’ . Also, information was gathered through
interviews conducted with the banking hall tellers and management team. The research
was effectively carried out and the findings pointed out the main sources of revenue,
causes of revenue decline and effects of revenue decline at TelOne Mutare Branch
highlighted by the respondents. Documentary analysis was also given to show the
revenue trends at TelOne Mutare Branch showing how far the telecommunication
company has gone in improving revenue.
5.3 Conclusion
The study focused on the Causes of Telecommunications Companies’ Revenue
Decline in Zimbabwe and TelOne Mutare was used as a case study. The researcher
indicated the effects of revenue decline and revealed the major factor affecting the
organisation as the decline in service delivery. This is true as it is evidenced by the late
response to network vandalism, late delivery of telephone and leased internet bills,
long waiting list of new installations, late salary pa among others. The decline in
revenue is also resulting in the late payment of salaries and allowances to its employees
and this is affecting the performance of the organisation as a whole as there is now
decreased employee morale. The Telecommunication Company is heavily in debt as
creditors have accumulated as it is failing to remit money to several institutions and
companies like NSSA who end up garnishing their accounts. Lastly the organisation
was once affected by industrial action, which saw operations at TelOne coming to a
halt in 2015 as employees were demanding their salaries. Even up until now the effects
of that industrial action can be felt although at a minimal level as there is still mistrust
between management and worker representatives.
The researcher managed to establish the sources of income for the telecommunication
company that is voice, broadband, income generating projects, data centres and cloud
computing, government grants, loans among others. It was noted that several scholars
highlighted broadband as the major source of income which telecommunication
companies are supposed to maximize on to ensure a sustainable source of income. The
researcher established that TelOne Mutare Branch was performing poorly in terms of
service delivery due to a decline in revenue inflows and identified the causes of
revenue decline as attributed to poor billing system, political influence, economic
challenges, corruption and resistance of customers in paying bills. It was noted that the
economy is performing poorly hence affecting the people’ s ability to pay bills to the
telecommunication company as most of them have been left unemployed due to the
closure of industries. Revenue leakages in the form of corruption and mismanagement
of funds meant for service delivery is also causing customers to resist in paying rates
since they cannot see what they paying for hence a decline in revenue collection.
Moreover, an interesting factor came to light as it was noted that residents are
anticipating a repeat of the Ministerial directive instructing telecommunication
company to write off debts hence contributing to the decrease in revenue inflows at
TelOne Mutare Branch, as people are not paying their bills. Also, the fact that there is
a poor billing system at the organisation is a contributing factor for revenue decline as
customers do not receive statements on time hence resulting in them relaxing and not
prioritizing on paying telephone bills.
From the research findings it can be noted that there are various strategies, which were
mentioned and there are considerable improvements which can be seen so far at
TelOne Mutare Branch. A revenue enhancement taskforce was set up that consists of
individuals from all departments who follow up on debtors and make sure that revenue
collection in all areas is maximized. Moreover, there is now an improvement in the
collection of revenue through the introduction of swiping system and mobile money
payment system (Ecocash and One Wallet) in all revenue halls and this will be
convenient enough for clients to pay their bills since there are cash shortages in the
country. These are just but a few that were mentioned however TelOne Mutare Branch
has a long way to go in getting back its title as the “ Number One Telecommunication
Company” by ensuring effective and efficient service delivery and ensuring that its
staff is motivated to work towards achieving the organisation’ s vision and mission.
Hence this can be only done if the telecommunication company has a sound revenue
base.
5.4 Recommendations
5.4.1 Measures to avert corruption
Corruption should be dealt with, as a lot of revenue is lost as a result. This should be
done through implementing stern disciplinary measures for corrupt activities, which
cost the organisation. There is also the rotation of low-level employees in banking hall
and credit control and this ensures that corruption is minimized.
5.4.2 Improving the use of ICT and ensure customers pay their bills
TelOne Mutare Branch should embrace ICT so as to improve the billing system
ensuring that statements arrive on time so that people prioritize paying telephone bills.
This will also ensure that registers are up to date so that revenue can be collected
efficiently and effectively in a transparent manner. The Telecommunication Company
should come up with measures to follow up on those with arrears and to also give
incentives to those who pay their bills as this will encourage other residents to pay
their bills. Telephone line and internet disconnections should be done to those who are
not paying their bills and inviting those who have large bills to come and make
payment plans with telecommunication company so that they can settle their bills in
instalments.
5.4.3 Entrepreneurship, Donor funds and central government assistance
TelOne Mutare Branch should explore other sources of revenue which can improve
the revenue base of telecommunication company such as running income-generating
projects effectively on commercial lines especially investing more in backbone
network, VoIP and cloud computing and data centres as this can boost the revenue
base of the telecommunication company. TelOne Mutare Branch should also source
donor assistance so as to improve service delivery and to cushion the strain, which has
been brought about by revenue decline. This is evidenced by how the China Eximbank
and Huawei Technologies is already assisting TelOne in terms of funds, expertise and
equipment for putting national broadband fibre link so as to ensure that internet
bandwidth comes from all ports of entry into the country hence this improves service
delivery and performance. Also, the telecommunication company is encouraged to
promote entrepreneurship by supporting the informal sector, which can contribute
more towards revenue through paying of their telephone and internet bills. Central
government should give what is due to telecommunication companies in terms of
government grants as this is their constitutional obligation as is stated in the
Constitution of Zimbabwe, that ‘ not less than five percent of the national revenues
raised in any financial year must be allocated to the provinces and telecommunication
companies. This will help to boost the revenue base of telecommunication companies
thus ensuring that they carry out their mandate; that is service delivery to the people.
5.5 Suggestions for further research
More studies should be carried out to explore the various strategies, which
telecommunication companies can undertake to improve on revenue generation thus
enhancing service provision. Although the telecommunication company craft various
plans and strategies, more emphasis should be placed on the implementation part
whereby they concentrate on results rather than inputs so as to effectively and
efficiently use the limited resources they have for service delivery thus ensuring
customers value for their money.
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Appendix A: Informed Consent
RE: Informed Consent
My name is Shepherd Mangweka, a final year Accounting student at Africa University. I am
carrying out a research on the Causes of Telecommunications Companies’ Revenue Decline
in Zimbabwe: A Case of TelOne Mutare Branch. I am kindly asking you, as a representative
of your company to complete the following questionnaire and supplying any other information
requested therein.
Purpose of study:
The purpose of this research is to investigate the causes of revenue decline at TelOne Mutare
Branch. You have been selected to participate in this research as you were deemed to be aware
of revenue issues within your firm considering your position in the company.
Procedures and duration:
If you decide to participate in this research, you will be asked to answer a questionnaire which
contains eight questions. This is estimated to take about twenty minutes of your time on
average.
Risks and discomforts:
The supply of the requested information carries the risk that information may get into the
wrong hands. To mitigate against that risk, this questionnaire will be sent to you through email
or otherwise submitted to your offices physically. Once completed, the questionnaire will be
collected by the researcher through the same mode and the information will be used only for
the purposes of this study.
Benefits/ Compensation:
There is no monetary benefit/ compensation associated with this research.
Confidentiality
Information supplied by the research participant will only be used for the purpose of the study
and will not be disclosed to the public. Personal information-such as names will not be asked
in this research.
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The decision to participate in or withdraw from the research is entirely up to the research
participant, and there is no penalty that will be associated with withdrawing from the research.
To answer questions
You are welcome to ask any questions you may have before you sign this form. (Please see
the researcher’ s contact details provided below.) You may take as much time as you need to
decide.
Authorization
If you have decided to participate in this research, please sign this form in the space provided
below as an indication that you have read and understood the information provided above and
have agreed to participate.
______________________________
________________
Name of research participant (please print)
Date
_________________________________________
Signature of Research Participant or legally authorized representative.
If you have any questions concerning this study or consent beyond those answered by the
researcher including questions about the research, your rights as a research participant, or if
you fell that you have been treated unfairly and would like to talk to someone other than the
researcher, please feel free to call Africa University Research Ethics Committee on telephone
(02020) 60075 or 60026 extension1126 or email aurec@africau.edu
Name of Researcher: Shepherd Mangweka
Contact Details:
Cell: +263 77 421 0100/ +263 202068376
Email: mangwekas@africau.edu
Appendix B: Research Questionnaire
CAUSES OF TELECOMMUNICATIONS COMPANIES’ REVENUE DECLINE
IN ZIMBABWE:
A CASE OF TEL-ONE MUTARE BRANCH.
Please may you kindly answer the following questions accurately by ticking
against the boxes provided on each questions where necessary. For any additional
relevant information not covered by this questionnaire use the comments and
feedback box provided at the end of the document.
NB: do not write your names anywhere on this questionnaire
Kindly assist by completing this questionnaire. All information collected will be
strictly used for academic purposes only.
Part 1: Personal Data
Department of Occupation_______________________________________________
Working Experience at TelOne Mutare Branch______________________________
Gender______________________________________________________________
Level of Education____________________________________________________
Part 2:
1. What are the TelOne’ s main sources of revenue?
(Rate them)
Strongly Disagree Neutral Agree
Disagree
Strongly
Agree
Voice
Broadband
Income generating projects
Government grants
Loans
Borrowings
Partnerships
VoIP
2. In your own opinion what do you think are the major cause of revenue decline?
(Rate them)
Strongly Disagree Neutral Agree
Disagree
Strongly
Agree
Power blackouts
Corruption
Poor billing systems
Network vandalism
Economic decline
Political influence
Resistance to pay by
customers
Foreign currency shortages
3. What challenges are you facing as employees as a result of revenue decline?
(Rate them)
Strongly Disagree Neutral Agree
Disagree
Strongly
Agree
Late salary payment
Inadequate resources
Failure to receive benefits
Job insecurity
4. How has revenue decline affected the organisation as a whole?
(Rate them)
Strongly Disagree Neutral Agree
Disagree
Strongly
Agree
Decline in service delivery
Salary backlog
Garnishing of TelOne
accounts
Downsizing
Labour unrest/ Industrial
Action
5. The following costs associated with credit control techniques if implemented
by TelOne Mutare would improve revenue collection (Rate them)
Strongly Disagree Neutral Agree
Disagree
Strongly
Agree
Online Billing system
improves revenue collection
Letters and Emails acts as
reminders for prompt
payments
Debt Factoring enhance
revenue collection
Interest on overdue
payments improve revenue
collection
Credit Policies ensures
adherence to payments on
time
Systematic Follow ups
enhance revenue collection
6. The following costs associated with credit control techniques if implemented
by TelOne Mutare would reduce costs of revenue collection (Rate them)
Strongly Disagree Neutral Agree
Disagree
Strongly
Agree
Online Billing system
reduces costs of revenue
collection
Letters and Emails acts as
reminders for prompt
payments
Debt Factoring enhance
revenue collection
Interest on overdue
payments reduces costs of
revenue collection
Credit Policies ensures
adherence to payments on
time
Systematic Follow ups
revenue collection
7. What strategies do you think can be implemented to improve
collection?...........................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................
8. Any other information and contributions relevant to the topic
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
………………………………
Thank you for your co-operation
Appendix C: Interview Guide
Interview questions for Management and Banking Hall Tellers on: Causes of
Telecommunications Companies’ Revenue Decline in Zimbabwe: A case of TelOne Mutare Branch.
Interviewer…………………………………………………………………………
Job title/position of interviewee……………………………………………………
Date…………………………………………………………………………………
1. How long have you been in the organisation?
2. What are the major sources of revenue?
3. What are the causes of revenue decline in your organisation?
4. How has the decline in revenue affected your organisation?
5. As policy implementers how far have you gone in implementing policies to
improve revenue collection so far?
6. Do you have competent or adequate staff to implement your strategies in terms
of improving revenue collection?
7. How is the political situation affecting your revenue collection?
8. What are the measures which you have put in place to overcome these
challenges?
Appendix D: AUREC Letter of Approval
Appendix E: TelOne Mutare Branch Letter of Approval