Revenue and cash flow improvements in Tel.One (PVT) LTD : meeting the challenges of resource constraints and telecommunications sector reform.
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Against a background of declining macro-economic conditions in Zimbabwe, significant challenges confront management in changing the financial performance of debt-ridden parastatals or public corporations. Chronic budget deficits, poor economic policies and mismanagement have ensured that these under capitalised companies post successive losses thus increasing the burden on the tax payer who must pay for their survival. The research study seeks to establish the strategies which management can implement to raise revenue and improve cash flows in preparation for privatisation. If the companies are to be competitive in a deregulated sector, the chosen strategies must offer quick and sustainable solutions. The shareholder's intention is to place these companies in a profitable position in order to gain maximum value from prospective investors. The recommended strategies are intended to improve financial performance of a telecommunications company confronted by a myriad of problems, which include: - • Critical shortages of foreign currency required to implement network development and maintenance programmes as well as payment of traffic handling obligations. • Competition from new entrants, • Government intention to privatise a company weighed down by a huge local and foreign debt. • An economy experiencing negative growth, high unemployment and chronic inflation. MBA-Strategic Financial Management • A population on the verge of starvation resulting from food shortages created by badly implemented land policy and drought conditions afflicting Zimbabwe and Southern Africa in general. The study focuses on key processes that create improvements in revenue and cash flow generation in the short to medium term. The processes are considered against a background of declining macro economic conditions and telecommunications sector deregulation. Experiences on deregulation of telecommunications sector in other countries are considered, and in Zimbabwe, the work done by BT consultants during restructuring and commercialization of the Post and Telecommunications Corporation is assessed. The study shall consider and recommend changes necessary to improve revenues and cash flows. In particular, the study shall: - • Critically review service provision for new customers, line transfers, reallocation of recovered lines, the delayed billing of connected customers and meter reading timetable for statement generation. • Consider and develop improvements in international traffic and accounting rates management in order to increase revenues, which contribute half of the company's profits. MBA-Strategic Financial Management • Assess and develop debt management strategies in order to improve cash flow and profitability. • Assess the company's cash handling procedures and recommend process improvements in order to realise the computed servings in overdraft interest or earnings arising from timely investments. • Develop a system of continuous improvement through tracking, feedback and training.