Chris Goko/Godfrey Marawanyika
ECONET Wireless Zimbabwe (Econet), the bedrock on which Strive Masiyiwa built his global telecommunications firm, is to invest well in excess of $200 billion this year as it hu
nches to double up its subscriber base to 500 000 by the end of 2005.
The investment is Econet’s largest ever expansion since the privately-owned network was launched in June 1998.
Company executives said the expansion would be funded internally, with no recourse to expensive local and foreign borrowing.
Chief executive Douglas Mboweni said the project would be financed by a combination of retained earnings and proceeds from the recent disposal of a 14% stake in Botswana-based Mascom Wireless.
Econet Wireless Holdings (EWH), the Zimbabwe Stock Exchange-listed company and Econet Zimbabwe parent, held the stake, which enabled the Zimbabwean operation to raise US$14 million.
The money, according to company bosses, will be used to import essential network equipment such as base stations.
Mboweni said Econet has already acquired 120 base stations, which should be shipped within the next four weeks, with installation immediately commencing. European technology and mobile phone company Ericsson supplied the equipment.
“The equipment from Ericsson will require the company to spend locally about $1 billion for every new base station. But due to our positive cash flow, we will not have to borrow the funds required to finance this expansion,” he said.
“The challenge, however, would be to continue to carefully manage our cash-flow over the next few months as we carry out what we believe is our largest ever expansion project in our history,” Mboweni, who has been involved in Econet’s technical acquisitions and development, said.
The expansion, he said, would inflate the subscriber base to the half-a-million mark. Currently, the network has over 260 000 customers.
Econet also expects to increase the number of pay phones from 3 300 as of December 2004 to over 10 000 by 2005, further spreading its reach to potential customers who cannot afford cellphones.
As many as 350 000 people are estimated to be utilising these payphones every month, with the Yourfone brand so far creating 2 500 direct jobs and thousands more in down stream service sectors.
Meanwhile, Mboweni said Econet had assumed “a conservative dividend policy” in a bid to conserve cash needed for the expansion programme.
“This has however been mitigated by the share buy-back programme that was approved by shareholders last month and on which we have already spent about $25 billion,” he said.
In another related telecommunications matter, A three-member tribunal set up by the International Court of Arbitration in Paris today began a landmark hearing in Abuja on an 18-month dispute between the shareholders of Nigeria’s second largest mobile operator Econet Wireless Nigeria, now known as V-Mobile.
The dispute between the shareholders was triggered when South Africa’s Vodacom tried to buy a 51% stake of Econet, in which Botswana-incorporated Econet Wireless Group already has a 5% shareholding.
Econet had argued that it had pre-emptive rights to increase its shareholding in the Nigerian mobile company because of provisions on first right of refusal enshrined in the shareholder agreement.