Econet pumps $94m into Zimbabwe

August 2, 2009

By Our Correspondent
HARARE – Econet Wireless International (EWI), a major international cell-phone operator owned by self-exiled Zimbabwean entrepreneur Strive Masiyiwa, has pumped US$94 million into Zimbabwe to expand its network.Buoyed by the relative economic stability ushered in by the government of national unity between President Mugabe, Prime Minister Morgan Tsvangirai and Deputy Prime Minister Arthur Mutambara, EWI shareholders are promising more funding to bankroll the next phase of a development programme – the provision of cell phone accessories such as wireless Internet, data services for specialist applications, 3G and broadband.
Econet, Zimbabwe’s leading cell-phone operator has proudly flaunted its 1 million subscriber base on billboards and TV adverts. The company announced last month that it now serves more than 1 million customers in Zimbabwe after the recent expansion of the network. Econet now controls 52 percent of the Zimbabwe market share.
Douglas Mboweni
Econet Zimbabwe chief executive, Douglas Mboweni said there was a sharp rise in airtime usage since February, when the inclusive government was established.
This means more money for the company, he said, adding that with accelerated growth in subscriber numbers, profit was expected to continue to grow.
The new government allowed the use of multiple foreign currencies in February, taking out of circulation the worthless Zimbabwe dollar that fuelled market uncertainty by fluctuating erratically due to hyperinflation, thus adversely slashing airtime usage.
Mboweni said the sharp rise in airtime usage was sweet news to the company.
“Detailed information will be supplied to the market when we release our half year results, but there is a very clear trend that shows that performance has vastly improved since January-February 2009,” Mboweni said in an update on Econet Zimbabwe’s operations.
“Econet Wireless now has the capacity to meet demand for new lines.”
Mboweni said that contract lines were now available on demand, whilst queues for prepaid lines were getting shorter with some Econet shops no longer having queues at all.
“Financing is available to the company to meet any requirement for the foreseeable future,” he said.
Econet Zimbabwe was able to rely on the parent company, EWI, he added.
Econet Wireless International was founded in 1993 by the exiled Zimbabwean entrepreneur, Masiyiwa, and has, in a decade, grown to be one of the top telecommunications operators in Africa, and one of the few African businesses with a global reach. It is one of Zimbabwe’s rare success stories.
Deputy Prime Minister Mutambara has called for the return of all exiled businessman such as Masiyiwa, many of them hounded out of the country by Reserve Bank of Zimbabwe governor Gideon Gono on trumped-up charges of externalising foreign currency.
While in exile Masiyiwa came to the rescue of a troubled newspaper and became the largest shareholder in Associated Newspapers of Zimbabwe (ANZ), publishers of the fiercely independent Daily News, the country’s largest-selling newspaper. Government banned the publication in 2003.
Masiyiwa has had a strained relationship with government, which accused him of bankrolling the then opposition MDC and linked the party to the newspaper. He has staunchly denied the charges.
Though founded in 1993, Econet only started to operate as a cell phone operator in 1998 because the Zimbabwean government refused to grant the company a licence. Masiyiwa took the government to court, and after a legal wrangle that lasted nearly five years, the company was eventually awarded a licence by the country’s highest court.
Since then, the company has rapidly expanded beyond Zimbabwe’s borders.
Econet Wireless International has successfully operated Mascom Wireless in Botswana with more than 410 000 subscribers, and commanding 72 percent market share. In Zimbabwe Econet controls 52 percent of the market share.
A controversial Nigerian operation, where Econet now controls a 5 percent stakehold, boasts of a 2.5 million subscriber base.
In Lesotho, Econet runs fixed and mobile phone networks. In Europe it has a telecommunications licence, together with the first African teleport establishment, Econet Satellite Services (ESS), linking more than 61 African networks to the global telecommunications networks. The company has an annual turnover in excess of US$100 million. ESS also has a subsidiary in Europe dealing in call cards.
EWI is now considering entry into the Kenyan market, The Zimbabwe Times has been told.
Econet’s rapidly expanding network in the Zimbabwe mobile telephony industry has helped lower call charges and enabled more Zimbabweans to own handsets.
Two weeks ago the Finance Minister, Tendai Biti, allowed cell-phones to be imported duty-free into Zimbabwe saying it was high time the country stepped into the global village.