Zim 2014 telecoms' booming

Published: 12 December 2013

The year 2013 saw many sectors struggling due to the liquidity crunch and other constraints. However the telecommunications sector tells a different story.

The sector encountered high growth rates mainly due to the high growth rates in the adoption of mobile services by different economic agents such as banks and retailers.

According to a study carried out by Budee.com, mobile penetration has increased more than seven-fold within four years and broke the 100 percent penetration barrier in early 2013 on the back of 3G mobile broadband subscriptions.

The study revealed that hundreds of millions of US dollars are being invested into the three mobile networks, Econet, NetOne and Telecel Zimbabwe. In terms of the status quo of competitiveness the study showed that NetOne's parent, TelOne (formerly PTC) still holds a de-facto monopoly on fixed-line services in the country.

The government has since planned to privatise up to 60 percent of TelOne and NetOne, either through an Initial Public Offer(IPO) or a strategic partnership with a foreign investor but its efforts are being hampered by the companies' debt positions as well as the unfavorable regulatory policies within imposed on the sector.

For instance, the studyshowed that in 2012 TelOne was burdened with huge debts that made it unattractive to investors as a stand-alone company. Three applicants withdrew, leaving the local MegaTel consortium as the only bidder. A short time later, MegaTel also withdrew.

A 2012 report from Report Linked revealed that the government then approached Telekom Malaysia to invest in NetOne and TelOne, but the company also declined, saying Zimbabwe was not currently conducive for such an investment.

According to Business Day investors expect 2014 to ride on the performance wave of 2013. The future looks bright for the IPO market globally which may be the same for the telecoms sector in Zimbabwe. Across the globe analysts forecast that investors will look to the IPO market to drive portfolio growth.

The study also showed that limitations of international bandwidth for the landlocked country have held back development of the internet and broadband sector, but this has changed since fibre optic links to several submarine cables have been established via neighboring countries.

Massive expansion of 3G mobile broadband services across the country has meant that more than half of the population now has access to the internet.

Despite the limited fixed-line infrastructure, Internet usage in Zimbabwe has continued to rise.

Based on the high demand for the services provided by the industry as well as the anticipated growth that the industry will encounter below are the identified market highlights outlined in the research report that will likely take place in 2014.

• Booming mobile and broadband market
• New domestic and international fibre connections
• Hundreds of millions of US dollars in network expansions
• TelOne, NetOne privatisation planned
• Second biggest mobile network up for sale
• Fourth mobile licence in waiting
- bh24