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The company was formed with 200,000 birr about two years ago
A telecommunications company formed by former employees of Ethiopian Telecommunication Corporation (ETC) is reporting rapidly rising profits despite problems with internal theft.
Hidasse Telecom Share Company announced that their registered capital has grown to 75 million birr.
At the company’s General Assembly last week, representatives announced that 35pct of their 74.9 million birr in shares, amounting to 26.2 million birr, was paid. Initially the company issued 20 million birr worth of shares. This was early this fiscal year. Now the board has decided to expand the share amount to 74.9 million birr because the first share allotment sold quickly.
The board’s report indicated that the average share purchased by the 2,508 shareholders is 31,000 birr. According to the report, the company hopes to earn more money this year by expanding voucher and SIM card sales and adding new services.
In the past budget year the company sold over 350 million voucher cards per month. During 2011/12 that amount was 200 million. The amount of SIM cards sold in the in the last months of the 2012/13 fiscal year reached 67,000, which was more than double the average 35,000 during the same time period the preceding year. The two items covered 35pct of the total sales of the telecom firm and made it possible for the company to cover its own expenses.
Bill collection, public phone revenue, cleaning, vehicle maintenance, and wooden cable tower building are additional businesses that the company undertook. The minimum commission that was paid by Ethio Telecom went up to five birr as opposed to three birr the year before.
According to the report the telecom firm earned 137.2 million birr from selling voucher and SIM cards, mobile phones and solar mobile chargers. It earned six million birr from bill collection, one million birr from wooden cable tower building, 3.1 million birr from vehicle maintenance, three million birr from bank interest, and 2.3 million birr from other sources. The report stated that the total revenue earned in the 2012/13 fiscal year is 152 .6 million birr.
According to the report, salary and benefits took the lion share of the company’s total expenses last fiscal year, which amounted to 83.2 million birr.
Daniel Tadesse chairs the company’s board. He said that the company is attempting to earn more revenue by venturing into businesses other than telecom. He said changing the attitude of the employees, excluded when ETC restructured, has been one of the major jobs for management over the past year. This is because employees were worried about their future after they were let go from ETC and they had a hard time trusting that things would be ok in the new company. To encourage the employees and increase their productivity the company started paying on commission based on their performance. Last fiscal year over 10 million birr in employee commissions were paid out to employees, based on positive performance. In addition to that the company has given a 100 percent salary adjustment for 1,500 employees who previously were earning low salaries.
The company is ‘employee owned,’ as workers have shares in the company. Yet, theft has been a major challenge during the company’s early stages.
Daniel told Capital that about 12 million birr has been stolen by its employees. Lack of management, customer service, selling skills and job insecurity are contributing factors to the robberies, according to the board chair Hidasse.
He said that about 80 employees have been involved and most of them have stolen small amounts.
“After following legal procedures we have been able to return the money stolen by the employees,” he added. One of the two employees who stole over one million birr each has been arrested in South Sudan in collaboration with Inter Pol, while the other one has not been arrested.
“These measures helped trust to develop between the company and its employees and contributed to increasing productivity,” Daniel stated.
Lack of sufficient vehicles and problems related with landline service are other challenges the company faces. To tackle these issues the telecom company disclosed that in the process of buying more vehicles and has asked Ethio Telecom to transfer the maintenance of landline telecom services to the company.
The company is also asking for additional telecom works that the government has indicated will be outsourced. Unfair market competition has been the other major challenge because the company’s capital has been very limited in its early stages.
The company was formed with 200,000 birr about two years ago. The company has hopes to earn 35 million birr in the current budget year. The report indicated that the total operating expenses for the company in the past fiscal year was 130.2 million birr.
The gross profit registered in the 2012/13 fiscal year stood at 22.2 million birr. The report presented by Daniel indicated that the previous year’s performance is a good indication that the company will become more profitable and become able to pay out a significant dividend to shareholders in the near future