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."

MTN eyeing Zimbabwe?

Zimbabwe's troubles deter (most) big telcos from investing

I seem to have been writing about the world's trouble spots rather a lot of late. Continuing in that vein, let me now turn my attention to Zimbabwe, the unhappy scene of human rights abuses and economic mismanagement leading to hyperinflation and general impoverishment. A hotly disputed election and an outbreak of cholera have added to the myriad woes of the southern African nation.

The country's parlous economic condition has naturally affected telecoms operators.

On January 28, Global Mobile Daily reported that Zimbabwe's Econet Wireless had resumed post-paid services, after they were withdrawn in November due to foreign currency shortages. The resumption of post-paid services was made possible by the Government's “belated decision to allow operators to bill subscribers in foreign currency”.

That decision, however, seems to have led to price rises large enough to alarm the Zimbabwean telecoms regulator (POTRAZ), which, according to a recent Cellular News article, has now revised telephone tariffs downwards by up to 40% in a move meant to make services more affordable. This seems to be an interim measure, pending the completion of an ongoing review apparently intended to balance the affordability of services for consumers with the viability of operators.

Given the famously poor state of the country’s economy, it is 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. According to the World Cellular Information Service database maintained by Informa Telecoms & Media, Zimbabwean mobile market penetration stood at just 12.26% at the end of last year, compared to a 37.73% penetration rate for Africa overall.

This difficult market is contested by three cellcos. Econet Wireless is the dominant player, with 59.61% of the market by December 2008. Last month Global Mobile Daily reported that POTRAZ had invited Econet Wireless and its two existing competitors to apply for 3G licenses. The market-leading MNO has reportedly been ready to offer 3G services since summer 2007, but the commercial launch has been delayed by the lack of necessary frequencies that can only be allocated by the regulator, according to the GMD article.

The other two players are state-owned NetOne Cellular (25.51% share) and Orascom Telcom-backed Telecel Zimbabwe (14.88%). Willingness to Invest in countries whose political and economic climates are not to the taste of other telcos is something of a recurring theme for Egypt's Orascom Telcom. The company made headlines last year by offering mobile services in secretive international pariah North Korea. Other large international groups, however, are strikingly absent from the Zimbabwean scene. None of the bigger African mobile empire-builders - MTN, Zain, Vodacom, Orange - have made a move on what is a decent-sized market with a population of over 13 million. My feeling is that it will not be until there is a serious improvement in the country's overall prospects that any other major groups will be tempted to set up camp in Zimbabwe.

Zimbabwe's troubles deter (most) big telcos from investing