The Zimbabwean fixed phone operator TelOne expects an uphill battle to grow its revenue base, according to Managing Director Chipo Mutasa.

The state owned telco has confirmed that voice revenues for the first half of the current year declined by 20%.

Mutasa said TelOne's bank accounts had also been garnished by the state revenue authority, with the Zimbabwe Revenue Authority (Zimra) deducting up to US$7-million in monies owed by telco.

However Mutasa and Finance Minister Patrick Chinamasa are close to agreeing on an offset deal.

"In the outlook, current challenges in revenue are likely to persist. Debts that we think are collectable are in excess of $150 million," said Mutasa. She added that TelOne had collected US$52 million from its debtors during the six month period to June 2016.

Total revenues for the period dropped from US$60 million in the year earlier period to US$49.4 million, with voice revenues declining 20% and data revenue growing by 10%.

According to the company's 2015 financial results, revenues are down at US$138 million from the 2014 income of US$157 million, with net profit at US$5.8 million.

The deal with the state will see TelOne offsetting the debt it owes in tax payments with debt owed by the government in unpaid bills. The company is owed approximately US$264 million in unpaid bills by its clients, which include government departments, parastatals and ministries.

Chinamasa urged management at TelOne to prioritise investment and development in data services at a time when there is growing demand for internet platforms that bring cheaper communication alternatives in light of declining voice telephony revenues.

He said the government expected TelOne "to meaningfully contribute" to state revenues in the future. TelOne is now close to renewing its interconnection agreement with Telecel Zimbabwe after the government bought a controlling stake in the mobile phone company from VimpelCom.