News, views and commentary from the telecoms sector across emerging markets and developing countries worldwide

Tuesday, 28 April 2009

MTN eyeing Zimbabwe?

Back in March, I wrote a short piece here about Zimbabwe's mobile market. I noted that given the famously poor state of the country’s economy, it was not surprising that Zimbabwe remains a laggard in terms of mobile penetration, even in the context of Africa, which is itself the continent with the lowest cellular teledensity. I reported a mobile penetration rate of just 12.26% (by December 2008) according to the World Cellular Information Service database maintained by Informa Telecoms & Media. As of March 2009 that figure has crept up to 12.82%. Mobile penetration for Africa overall stands at 40.05%.

In March, I argued that it would not be until there is a serious improvement in the country's overall prospects that major telecoms groups would be tempted to invest in Zimbabwe. To date, the only big player brave enough to contend with daunting challenges such as the world's highest rate of inflation has been Orascom Telecom, whose Telecel Zimbabwe operation has a 14.39% share of the market according to WCIS.

The CEO of state-owned mobile operator NetOne Cellular, however, seems to be bullish about the prospect of a proposed Government plan to sell his company to foreign investors, according to a recent Telegeography article.

NetOne boss Reward Kangai is quoted as saying that there is "huge interest" in the proposed privatisation and that "the unnamed interested parties were already present in several African countries." Kangai concedes that the operating environment might deter new entrants and claims that "the Government is considering reducing equipment taxes for telecoms companies – currently as high as 60%."

A more recent Cellular News report picks up on speculation about the identity of potential strategic investors, contending that one of them might be South Africa's MTN. Rumours to this effect were apparently heightened when the company took a stand at a recent trade fair in the country. MTN's route into the Zimbabwe market, contends the article, would be a 60% share in Telecel rather than the privatisation of NetOne. MTN, then, does not seem to be one of the "unnamed parties" referred to by NetOne's Kangai.

Why would MTN consider such a challenging opportunity? MTN spokeswoman Nozipho January-Bardill is quoted as saying: "We have always said we are looking for value-enhancing opportunities and Zimbabwe presents us with one. Zimbabwe is our neighbour sitting there waiting. The Government is embarking on a reinvention of itself and has opened up to South African companies to go in and operate there."

MTN, then, seems to have confidence in the unity Govermnent's plans to lift Zimbabwe out of the extreme economic difficulties suffered in recent years. According to the Telegeography article, "the planned privatisation forms part of a wider effort to sell state assets in the oil and infrastructure sectors to raise desperately needed funds for an economy crippled by hyperinflation." The unity Government, which took office in February, does continue to face daunting hurdles on the road to improving the lot of its citizens. Mr Kangai is optimistic, however, stating that "Zimbabwe is open for business, investors will be able to start operations here at low cost."


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