Zimbabwean Operator Secures Expansion Funding

Econet Wireless Zimbabwe has surprised the market by announcing that it had managed to secure a loan of US$20 million from the Cairo-based African Export-Import Bank (Afreximbank) to enable it to add over 300,000 subscribers to its network before the end of the year, its second largest ever expansion in seven years.

Econet currently has over 470,000 customers on its network, whose capacity will be expanded from 500,000 to 800,000 under the new expansion program to be financed by this loan. Announcing the breakthrough at an analysts briefing in the city last week, an excited Econet CEO Mr Douglas Mboweni said that it had taken months of painstaking negotiations to secure the facility which will be serviced through Econet's foreign currency earnings. "We are very comfortable about our ability to service the loan with our forex revenues,"

Mboweni also assured analysts that the large capital investment and loan repayments would not affect dividend payments from Econet. He said the order for new equipment for the expansion included components required to launch new generation services such as GPRS and 3-G, which have not yet been seen in Zimbabwe. All the equipment will be supplied by Ericsson.

Mboweni said that once the equipment arrived, Econet would roll out rapidly to ensure that the lines were available from the end of October.

However, the company would release the lines gradually until the end of the year. The Econet CEO said that although there was still a huge pent up demand for the lines in the country, caused by the chronic shortage of foreign currency, his company was of the view that the more than 300 000 lines will go a long way to addressing the current demand. The company will also release an additional 10,000 pay phones to ensure that those who can no longer afford to own a cell phone because of the economic hardships can still have access to telecommunication services. Econet already has 6,000 payphones which provide access to over 400,000 users every month.

On the capital investment, he said apart from the foreign equipment, Econet had already spent money on construction of base stations which use locally available steel towers and construction materials.

"We have been building towers all over the country for months knowing we would eventually get this loan, so there is very little additional capex going forward." "

Posted to the site on 10th July 2006