Zimbabwe cellphone boom still on hold

Zimbabwe cellphone subscribers have increased four-fold since a unity government took office last year, but local firms say they battle to attract investors who worry the political truce won’t last.

In 2008, when the local currency was ravaged by world-record hyperinflation, SIM cards were selling for up to $220—not including a phone.

The lucky—and wealthy—few who could afford cellphones were routinely greeted with messages such as “The number you have dialled is not reachable, please try later” or “The number you dialled does not exist.”

Then the local currency was abandoned and the unity government took office in February 2009, and the price for a SIM card fell to $1.

Even in a country where per capita GDP is just $160, and unemployment is estimated at over 90%, people have snapped up phones.

Forty nine percent of the nation’s 12-million people now have a cellphone, up from 9% 17 months ago, according to government data—making telecoms of the few industries to rebound strongly after a decade of economic freefall.

Zimbabwe has three mobile operators, but Econet Wireless controls 73% of the market and has dramatically upgraded its network, using earnings from its operations on the rest of the continent.

When Econet unveiled its 3G network a year ago, lines snaked through the streets as people rushed to spend $100 for the service.

Econet CEO Douglas Mboweni believes telecoms in Zimbabwe still have room to grow.

“With a mobile penetration rate of 40%, there is still a significant demand for communication services in Zimbabwe,” Mboweni said in a circular to shareholders.

Investors are still reluctant to enter the market, as long-ruling President Robert Mugabe and his rival Prime Minister Morgan Tsvangirai feud over political posts and begin to mull elections in the next year or two.

Political risks only add to difficulties of investing in Zimbabwe, which ranks 159 out of 183 countries in the World Bank’s ease of doing business index.

Perceived risk
While Econet has expanded rapidly, state-owned operator Net One has battled to find investors to upgrade its systems.

“This is a vibrant market, but the problem is that investors always want to buy our companies at a discounted prices because of perceived risk and they want to use this as a discount to get our assets at a lower value,” said Net One managing director Reward Kangai.

Zimbabwe’s government is spending $6,2-million dollars to link Zimbabwe to fibre-optic cables running under the sea on both the Atlantic and Indian coasts of Africa.

Technology minister Nelson Chamisa says the link will improve both phone and internet services for fixed lines and cellphones, which he hopes will help lure investors.

“This is the best time to enter the market because we are a virgin market, there is huge potential,” said Chamisa.

“We are inviting investors to launch internet, mobile connectivity here despite the ‘so-called fears’. We need investors.”

Government has also removed import duty on all cellphones and computers, hoping to promote investment in technology.

Aimable Mpore, chief executive offer of Telecel, the second largest mobile operator, said he believed links to the undersea cables will change the market.

“Zimbabwe has been starved [of connectivity] but it’s coming,” he said.

“The sector has recorded growth over the past two years due to dollarisation. Before that operators could not buy equipment like base stations and other things we use.”

“Even in stable economies there are risks,” he added.
- AFP

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