STATE-owned NetOne paid over $1,7 million in rentals for base station sites it acquired but failed to develop, it has emerged.
According to a forensic report released recently on the state of affairs at NetOne during Mr Reward Kangai’s administration, the mobile phone operator had acquired 164 base station sites as at June 30, 2016.
It failed to put base stations on the sites but still continued paying rentals for them.
“From the discussions with NetOne technical team and our review of the schedule of base stations sites acquired in the period under review, we gathered that there were 164 undeveloped sites as at 30 June 2016. Mr Wenga (NetOne employee) availed us with a letter dated 30 May 2016 written by Mr Mukandatsama addressed to the acting chief executive officer. Mr Mukandatsama was requesting to surrender 138 of the undeveloped sites. The totals rentals incurred for the 138 sites as at 16 April 2016 was $1 220 236,45. The 164 sites had incurred rentals totaling $1 752 283,45,” reads the audit report.
The auditors said they sought clarification from Mr Kangai why NetOne acquired more base stations than they could develop.
“He stated the following reasons — a tender to construct 600 base station towers was awarded to Essar Holdings and Masimba Holdings. The tender required the companies to come up with financing proposals. Base station sites were thus acquired in anticipation of this project. However, the NetOne board of directors rejected all the financing proposals which were tabled before them. NetOne decided to finance the project using internal resources. However, due to cash challenges being faced by the company, the rate of developing the sites was slower than had been anticipated. As a result, not all base station sites acquired could be developed,” reads the audit report.
Initially, NetOne wanted to build 350 base station towers.
“The initial plan for the project was to construct 350 base station towers. The loan condition for the Chinese bank to finance the project was that there be lease agreements for all 350 sites. Mr Kangai therefore approved the acquisition of the sites in order to meet this condition. The number of base station towers was however later reduced to 175. This resulted in there being more base station sites than could be developed. Some of the sites were acquired for strategic reasons — to beat competition,” further states the audit report, prepared by Price Waterhouse Coopers.
Mr Kangai and his management were fired in October for alleged corporate malfeasance at the parastatal.
Mr Kangai is challenging his dismissal.
- The Herald