Zimbabwe seeks investors for troubled mobile operator

ZIMBABWE has finally opened up its telecom sector to regional and international investment following a decade of an unfriendly political situation that engulfed the country and scared away investors.

The Zimbabwean government has said it is looking for an international or regional operator to buy a 49 percent stake in the financially troubled government-owned mobile operator NetOne. Like many other countries in the region, the Zimbabwean government has failed to recapitalize the operator and keep it afloat following stiff competition from private operators; hence the decision to sell the company before it closes.

Zimbabwe has a low mobile penetration rate, making it the best investment for regional or international operators wanting to expand their geographical footprint. Currently, Zimbabwe has one of the worst networks in the region because of the lack of investment in the sector.

Selling NetOne is expected to transform the country’s telecom sector and open a window for more investment by international operators to enter the lucrative African telecom market.

"The Zimbabwean government has since 2009 been working on polices that are investor friendly. It will not surprise us to see investors’ entering the market as is the case anywhere in Africa," said Amos Kalunga, a telecom analyst from Computer Society of Zambia.

But investing in Zimbabwe still remains a challenge to many international operators as the country’s laws allow foreign companies to own only a 49 percent or less stake, he said. The rest of the shares are supposed to be owned by indigenous Zimbabweans, he said.

However, the opening of the country’s telecom sector to investment by private operators is expected to help Zimbabwe regain its position as the second fastest-growing information and communication telecommunication (ICT) sector in the region after South Africa.

Over the past two years, the Telecommunications Operators Association of Zimbabwe, an association protecting the interest of operators in the country, has been negotiating with Zimbabwean authorities to create a favorable regulatory environment that would stimulate investment and growth in the telecom sector. Zimbabwe’s regulatory policies, among other things, allowed the government to intercept calls and required operators to apply for various licenses based on the technology and services they offered.

Foreign telecom investors’ fears also stemmed from the fact that mobile tariffs adjustments in Zimbabwe were made every three months in order for service providers to cope with hyper-inflationary environment.

But last year, Zimbabwe’s Postal and Telecommunication Regulatory Authority, the country’s telecom sector regulator, relaxed the rules and approved giving existing and new operators a blanket license. As a result of the shift in government telecom policies, the three operators in the country –Telecel, Econet and NetOne — have embarked on a massive roll out of programs and services aimed at improving communication services.

Operators been allowed to roll out 3G networks, allowing subscribers to send and receive e-mails and browse the Internet on their mobile phones.

"I don’t see any European operator investing in Zimbabwe any time soon because of the still unstable political situation. But South African operators are most likely to take the risk and enter the market," said Edith Mwale, a senior analyst from Africa Agency for ICT Development.

The Zimbabwean government has recently contracted a $45 million loan from the Chinese Import Export Bank that will be used to connect Zimbabwean optic fiber to the East African Submarine cable system under the Indian Ocean in Mozambique in a bid to improve communication.

Zimbabwe is ranked 132 out of 135 on the World Economic Forum Global competitive report on technology readiness — one reason the loan from China was considered to develop the sector.