Learning from past mistakes, the new Zimbabwean President, Emmerson Mnangagwa, wherever he goes preaches on a new approach to business that may lead to Zimbabwe’s economy resuscitation ‘Zimbabwe is Open for Business.’ Often times we hear him reiterate on that in his speeches or interviews. With such an open business approach, there has been some activity in the telecoms sector as foreign investors have tabled offers to buy shareholding in state-owned mobile operators NetOne and Telecel as well as fixed-line telecoms company TelOne, which are all desperate for a fresh capital injection.
This week the Information Communication Technology minister Supa Mandiwanzira revealed that he has received bids for both controlling and majority equity stakes in the telecoms entities, but said government will consider each and every bid from foreign investors as the country opens up for business.
This comes as it emerged that these entities require huge amounts in fresh capital injection if they are to compete viably in the market against Econet, the largest mobile phone operator by subscriber numbers.
According to Mandiwanzira, NetOne and Telecel combined need in excess of US$500 million in fresh capital injection for network expansion and other purposes.
On the other hand, TelOne has written to government to have its US$347 million legacy debt taken over as it moves to restructure its balance sheet which is said to be deterring investors.
“Yes, there is an interest in people to buy stakes in NetOne, Telecel and TelOne. As you know, the president is saying we are open for business and we will look at every proposal, on its merits and demerits and make a decision on that basis. But of course this is not a decision that can be made by me as a minister. I have to take it to the cabinet, my principal and a decision is made at that end,” he said. “We have had inquiries on buying equity, interest in government-owned networks, with some offering to buy entire shareholding and some offering to partner with the government and inject capital for the expansion of those networks.”
He said that: “But as far as I’m concerned we are open for business and we will look at every proposal we receive. We will look at the money being offered and obviously make a decision based on that.”
Debate over whether government made the right decision by taking over Telecel, a private company, is still raging but Mandiwanzira said generally government welcomes investments.
“That’s the general attitude and we are open for business. Being open for business does not mean that you close any offers but when you receive offers you can then determine whether it’s worth it or not to sell the asset or is the asset that they want worth selling at this stage,” he said.
“There is a huge investment that could come into Telecel in terms of expansion of the network; anything between US$30 million to US$100 million would do the company very well.”
Government made an immediate capital injection of US$5 million into Telecel as soon as it finalised the purchase of the 60% equity stake in the company last year.
Telecel’s funding will ensure that the company rolls out new technologies to meet subscriber needs with the mobile operator having last year commenced network upgrades necessary to close the identified and well-known gaps in its service provision.
“NetOne would require an investment of not less than US$400 million for it to be really in a position to compete with its peers in the market and of course there is a huge investment required in TelOne to finish its national backbone that it has a responsibility to build,” he said.
The last capital injection NetOne had was a US$218 million loan from Afreximbank which has seen the operator improving its subscriber base and revenue.
The huge capital investment required for telecommunications infrastructure rollout is often an inhibiting factor in the quest for universal access to broadband and ICTs in general. This is why the government has been encouraging infrastructure sharing.
Mandiwanzira said other proposals coming in were on the development of fibre optic networks with a South African company (DFA) having committed to invest US$60 million into metro optic fibre in the next five years.
“We don’t have specific quantum of foreign investment that is coming to the ICT sector so far. But I can tell you that there is huge, enormous interest in the ICT and telecoms space since the new dispensation came into power. There has been quite some excitement with investors coming on board from South Africa, China, Hong Kong, India, the United Kingdom and many other places.”