Zimbabwean economists say the local mobile market has a 9% penetration rate, which is considerably lower than the Southern African average of 78.5%.
"Mobile penetration has only reached 9% in Zimbabwe in the last 10 years," says Interfin Securities head of research Farai Dyirakumundu. "Our high tariffs are also unattractive for foreign investors. But that should change as soon as the political climate has calmed down."
The International Telecommunications Union’s country reports for 2007 state Zimbabwe has only 2.58 telephone lines per 100 users. Of the telephony services available, 78.1% are mobile. The country has only 10.12 Internet users per 100 people and only 0.11 broadband users per 100 people.
Dyirakumundu says there are still some concerns following the power-sharing deal that was signed on Monday between Zimbabwean president Robert Mugabe and the opposition led by Morgan Tsvangirai.
Mugabe’s Zanu-PF and the two Movement for Democratic Change factions were engaged in rigorous power-sharing negotiations, mediated by South African president Thabo Mbeki, following the contested presidential elections earlier this year.
The economist is optimistic the regulatory environment, monitored by the Postal and Telecommunications Authority of Zimbabwe, will evolve to allow more players into the telecoms markets. "There have been a few applications by small companies who want to participate in the telecoms sphere," adds Dyirakumundu. Zimbabwe has one fixed telephone operator, TelOne, and three mobile operators: Econet, NetOne and Telecel.
Telecoms investment inevitable
South African analysts say the regulatory environment in Zimbabwe will play a strong role in any future investment. "Competition in the operator space will be dictated by regulatory evolution, and this will decide whether additional licences will be issued, or whether national incumbent, TelOne, will be privatised," says African Analysis researcher Dobek Pater.
Analysts say Zimbabwe’s lack of infrastructure will also drive the need for telecoms investment.
"The country lacks every conceivable type of primary infrastructure and telecommunications is likely to be the first area in which investment will have to occur. Currently, mobile users experience congested networks, an inability to make international calls and fixed penetration is low," says Frost & Sullivan spokesman Patrick Cairns. He points to the findings by the International Telecommunications Union as an indication of Zimbabwe’s lack of resources.
The Department of Communications (DOC) says SA will use its position as the chair of SADC to drive ICT issues in the region, in particular Zimbabwe. "Our ICT intellectual affairs and trade branch will come up with an ICT proposal in which key issues, such as digital migration, will form part of the SADC programme," says DOC spokesman Joe Makhafola.
BMI-TechKnowledge analyst Maxwell Chanakira says SA has little IT investment in Zimbabwe, save for the interest shown by Vodacom and MTN. Despite the lack of investment in the country, Chanakira says businesses that investment in Zimbabwe rake in more profits compared to investments in SA, because of the high risk. Yet a change in legislation could render a corporation obsolete.
"This is the time to go into Zimbabwe when the level of uncertainty is high and get a foothold. Once things become clearer, it will be difficult to get in because the value of companies will have risen significantly. Currently, Zimbabwean assets are valued at 25% of their real value," says Chanakira.
MTN may well be looking at investing in Zimbabwe. The mobile operator is known for investing in high-risk countries such as Iran. MTN says an investment in Zimbabwe is core to its vision of being a leader in telecommunications in emerging markets.
Telkom says it already has relationships with Zimbabwean telecommunications though interconnect agreements with the country’s operators and is willing to chase more investment in SADC.
Telkom’s group executive for corporate business development, Mike Mlengana, says the company’s strategy for growth requires that it considers all opportunities that arise across the SADC region, as well as the rest of the continent.