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Telecommunications drive economic growth

By Sukoluhle Nyathi

CELLPHONES have become a necessary accessory for many Zimbabweans, whether as a tool for communication, a status symbol or merely a fashion statement.

“Verdana, Arial, Helvetica, sans-serif”>The penetration rate at the time stood at 1,4 main lines per 100 inhabitants with a waiting list of over 109 000 people. With an installation rate of 6 745 lines a year, it was estimated that the Zimbabwe Postal and Telecommunications Corporation (ZPTC) would have taken 14 years to supply those on the waiting list.

It is also likely that the waiting list in itself was not truly reflective of the situation on the ground. Furthermore, the service was poor with completion rates in telephone calls falling below 30%.

However, this situation was not only unique to Zimbabwe but to other countries with state owned telecoms companies.

The only difference being that some countries had already taken cognaissance of the fact that tight public sector budgets and dismal performance of state owned companies could no longer cope with the increasing demand for telecommunications.

This led many governments to turn to private sector investment to provide telecommunications services and this was further augmented by development of new technologies such as internet, mobile phones and paging which reduced entry costs and lowered transaction costs. So this liberalisation spread like a plague and saw most countries privatising the state-owned telecoms provider, introducing competition and creating an independent regulatory authority.

In Zimbabwe, the liberalisation of the sector has been haphazard and largely unplanned, fraught with legal battles which began with Strive Masiyiwa’s application through Econet, to establish cellular technology in Zimbabwe at a time when other African countries like Algeria, Congo,

Kenya, Senegal and South Africa, had already taken steps to do so.

The Post and Telecommunications (PTC) turned down the application. Subsequent High Court intervention ordered PTC to issue a licence within a given time frame.

However, PTC appealed to the Supreme Court on the basis that it had a monopoly and was not authorised to licence anyone.

PTC won the case but Econet went on to challenge the monopoly successfully.

In 1996 PTC launched the country’s first cellular operations through Net*One however, regulations did not allow for competition. It took two years for Econet to challenge these regulations, finally culminating in their being issued a licence in 1998, making it the third operator alongside Telecel.

This made Zimbabwe one of the countries alongside Cote D’Ivoire, Egypt and Madagascar to operate three competing networks. This set the stage for further reform as in March 2000, parliament passed the Postal and Telecommunications Bill, which allowed for the establishment of the independent regulator – Postal and Telecommunications Regulatory Authority Board of Zimbabwe (Potraz) – to issue licences and regulate the players in the industry.

The PTC has now been unbundled into three separate entities, namely Zimpost, TelOne and Net*One, with PTC assuming a new corporate identity as TelOne.

The stage for privatisation has now been laid, as the government is poised to sell part of its equity stake in TelOne and NetOne.

* Sukoluhle Nyathi is an investment analyst with TN Financial Services.

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