Mozambique Telecom (Tmcel) has a debt of more than 400 million dollars and the company's operations tend to aggravate this burden, the Minister of Transport and Communications, Mateus Magala, revealed in parliament on Wednesday.

"Tmcel has lost the ability to honor its commitments in the market, in some cases including the salaries of its many workers, around 1,700. The company carries a high accumulated global debt of more than 400 million dollars, with a tendency to worsen," he said, acknowledging that this situation is much more complex than that of Mozambique Airlines (LAM).

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The Minister lamented that the company is losing its market share with a visible decline in revenues given that the environment is highly competitive. Quoted by Notícias, he said that the reputation and perception of customers about the brand is progressively deteriorating.

He said that the technological system still in use at Tmcel is outdated and needs to be updated as it is at the end of its useful life, as well as requiring high operational and maintenance costs.

Magala revealed that a study into the company's situation has indicated that urgent and precise restructuring is needed, otherwise the company will go down a path of no return, "collapse and insolvency".

One of the report's recommendations is to hire a multinational telecommunications partner with strategic capital, which, however, will oblige the state to sell at least 80% of its stake, the government to assume Tmcel's debt and loans and reduce the workforce by 60%.

A Tmcel management committee has been set up and is due to present a report on the company's fate this month, according to STV.

"This Council works with the group and Tmcel, led by the Ministry of Transport and Communications, and includes managers with extensive management experience and in-depth knowledge of telecommunications," said Magala.

Tmcel is the result of the merger, in 2016, of two companies in financial decline, namely Moçambique Celular (Mcel) and Telecomunicações de Moçambique (TDM), by decision of the government. (News, STV)