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Johannesburg - Auditors are concerned about telecommunications operator Neotel's ability to continue business.
"... the company's recurring losses from operations and shareholders' deficit raise substantial doubt about its ability to continue as a going concern," auditors Deloitte & Touche said in an annual report filed with the US Securities and Exchange Commission.
Last month, Neotel said it was considering "realignment and restructuring" as it evaluated its business strategy.
"Neotel is in the process of evaluating its business strategy, operational performance, efficiency and competitiveness with a view to ensuring that long-term sustainability is achieved," it said in December.
It was sent in response to questions about allegations the company was planning to fire staff in light of tough economic conditions and strong competition.
When asked for comment this week, Neotel sent the same statement. A spokesperson said Neotel was "not in the position to respond to questions as yet; we are busy with the process of restructuring and realignment".
"Once the process is complete we will then be able to respond to your questions with certainty."
Business Day reported on Thursday that the report said Neotel's losses increased to R1.15bn from R739,5m in the 12 months leading to March 2009, compared with the previous year.
The auditors' report, filed in November by India's Tata Communications which owns 56% of Neotel, said "the shareholders and lenders are discussing ways to meet the funding shortfall as envisaged in the revised business plan".
A review of "the business plan, strategy, and overall performance" would be completed by December 31, 2010, according to the report.
It added "the directors have reviewed the company's cash flow statement for the forthcoming year to 31 March 2011 and, in light of this review and the current financial position, they are satisfied that the company has access to adequate resources to continue in operational existence for the foreseeable future".
Business Day reported there was speculation that CEO Ajay Pandey would leave the company when his contract expires in March.
In December, technology newswire service TechCentral quoted Neotel's head of human resources, Lucky Ndwalaza, as saying in a letter that Neotel would consult staff in January and February, with retrenchments likely to follow in late April.
