Zimbabwe’s state controlled telecommunications company, NetOne – which is lagging behind market leaders Econet and Telecel in subscriber numbers – has targeted a 4% revenue growth to $110 million by the end of December this year.

The government-run telecommunications company has 2.7 million network users, the company’s managing director, Reward Kangai, told Zimbabwe’s parliament on Monday.

Its biggest rival, Econet Wireless, has over 8 million subscribers while Telecel Zimbabwe has around 3 million network users.

Although other state-owned enterprises in Zimbabwe are struggling to make a profit, Kangai said NetOne could have made a profit of about $3 million in the past year, thanks to average revenue per user (ARPU) figures which have remained above $3.

However, the $3 million profit that NetOne could have recorded was wiped out by the state revenue collector, Zimbabwe Revenue Authority (Zimra) which claimed penalties and fines from the government telco.

“Revenue has been going up and the financial statements were showing a profit but Zimra came up and put in penalties and that changed things. We were hoping to make a $3 mln profit in 2013,” he said.

ARPUs for NetOne remained at $3.76 last year although this year is likely to be different as the company has projected ARPUs at $3.06.

Telecom industry executives in Zimbabwe say mobile companies are facing increased competition from cheaper instant messaging applications that have seen subscribers make fewer calls, and choose to communicate using the likes of WhatsApp instead.

To effectively manage its survival in the industry as well as grow its market share from the current 18%, Kangai said NetOne requires $570 million for network expansion and broadening of its capacity.

“To be able to offer a competitive very good quality of service, we need roughly 2,300 new base stations. So we are looking at $570 million roughly,” Kangai said.