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Econet undeterred by minister’s threats

Staff Writer/Reuter.

ECONET Wireless Kenya (EWK) on Wednesday said it is not deterred by recent statements by the country’s Minister of Information and Communication Raphael Tuju regarding the company&

#8217;s licence in Kenya and is proceeding to roll out its network as planned.

Tuju said in a statement to parliament on Tuesday that the status of the licence previously awarded to Econet Wireless Kenya was still pending a court decision.

Econet won the licence to operate Kenya’s third mobile network in September 2003 after it bid US$27 million with local partners.

But its launch has been delayed due to shareholder wrangles as some of the local partners have failed to pay their share of the licence fee.

Tuju cancelled the licence in November.

Econet received a boost in March when the Kenya High Court temporarily restored the licence and lifted an injunction on the network rollout by the company’s previous local partners.

Tuju said in his statement the case had not been fully determined by the court.

“Econet does not have a licence to roll out a network. That is the fact. The matter is still in court,” Tuju said. “The attempt to advertise that they are going to roll out are steps calculated to increase the figure that they would like to conjure up in their suit against the government,” Tuju said, without elaborating.

In a statement, Econet executive director for business development in Kenya, Zachary Wazara, said Econet had already responded to most of the allegations made in parliament by MP Jimmy Angwenyi and feels that there is a deliberate attempt to misinform legislators about the company and its operations, including defaming Econet management and the founder of the company, Strive Masiyiwa.

Wazara said Econet has already demonstrated its management and financial capability to build and commission a third mobile network in Kenya where the company has already invested more than US$30 million and is currently carrying out a major recruitment drive to fill key positions in preparation for the launch of the network by the end of September.

“We are amazed that the minister has, and continues to make defamatory and unsubstantiated remarks and allegations against Econet Wireless and also questions the integrity of our executives, including the founder of Econet, Mr Strive Masiyiwa, when there is ample evidence to the contrary,” Wazara said.

We are not deterred by these remarks and we are seeking legal advice as we feel the company has been unnecessarily vilified by politicians who have been misled into questioning our commercial motives in Kenya,” Wazara said.

He said Econet has already proved its competence and ability to build and operate mobile networks in Africa.

In Zimbabwe, Econet Wireless Zimbabwe was awarded a licence in December 1997 after a five-year court battle fought by the company to remove the monopoly of the state-fixed operator which was eventually struck down by the Supreme Court as unconstitutional.

The company launched its network in July 1998 and within three months had assumed a market leadership position despite operating two years after two main competitors who had foreign technical partners.

While Econet was awaiting to launch the Zimbabwe network, the company bid for a GSM licence in Botswana and launched a mobile network in February 1998 barely six months after it had been licenced.

“The Botswana company, trading as Mascom Wireless, is the largest cellular company with a subscriber base of over 300 000 and has achieved the highest ever penetration rates recorded in an African mobile cellular market,” Wazara said.

Mascom Wireless has just signed a US$13million for the supply of equipment to further expand the network, which includes installing an additional 50 base stations.

The Zimbabwean mobile company, which is now the largest based on subscriber numbers, made commercial history when it raised additional funds for expansion through a public offering which was three times over-subscribed, leading to the eventual listing of the company’s shares on the Zimbabwe Stock Exchange (ZSE) in September 1998.

Econet is now one of the largest capitalised companies on the ZSE valued at US$300 million. Wazara said Econet is also currently expanding its Zimbabwean mobile network at a cost of more than US$35 million to extend geographical coverage and double the subscriber base by the end of the year.

“When completed, Econet will be by far the largest telecommunications company in Zimbabwe exceeding the combined subscriber base of its two cellular competitors and the fixed telephone operator,” he said.

He said following Econet’s success in Zimbabwe, the company’s board of directors sought and got shareholder approval to embark on a global expansion programme, resulting in the establishment of offices in South Africa, from where Econet is investing in targeted African markets in the core areas of cellular, satellite and fixed telecommunications businesses.

The company subsequently established a consortium which successfully bid for a GSM licence in Nigeria where it paid US$285 million in licence fees and launched a network in August 2001. The company has since grown to become Nigeria’s second largest mobile operator with a subscriber base of over 25 million customers.

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