MTN scours Zim telecoms market

MTN scours Zim telecoms market

MTN YELLOWSOUTH Africa-based multinational mobile telecommunications company, MTN, is scouring the Zimbabwean market for opportunities after a failed bid for the purchase of a stake in a
government-owned telecommunications firm about four years ago, the Financial Gazette’s Companies & Markets (C&M) can report.MTN’s planned acquisition of a 49 percent stake in Zimbabwe’s state-owned cellular network NetOne collapsed after some members of the then-inclusive government opposed its privatisation in 2010.

This was the second time MTN had failed to acquire the network after another failed attempt in the late 1990s at which it wanted a 51 percent stake of the network for US$30 million.
MTN’s latest move comes as government was reported this week to have cancelled the operating licence of telecommunications firm, Telecel Zimbabwe, after the company failed to pay for its licence. Government is said to be planning to buyout the network from the wrangling shareholders but had indicated it will not discontinue the network’s operations. Mobile telecommunications companies, NetOne, Telecel and Econet Wireless Zimbabwe now pay US$137 million for a 20-year licence with effect from 2013. Only Econet has paid for its
licence, while Telecel has been battling to make payments for the renewal of its licence which expired in June 2013. Highly placed sources said MTN dispatched top level executives to Harare two weeks ago to investigate the market for possible opportunities. C&M was informed that a Zimbabwean based in South Africa brokered meetings between government and the telecoms giant, which culminated in discussions two weeks ago.

Details of the discussions were not immediately available, but those aware of the developments said the firm’s officials met authorities at the Ministry of Finance and Economic
Development, the Postal and Telecommunication Regulatory Authority, ZESA Holdings and banking institutions, including POSB Bank. The Ministry of Finance has an office responsible for fiscal policy and investment promotion, which is now headed by Desire Sibanda, the former permanent secretary in the Ministry of
Economic Planning and Investment Promotion during the inclusive government.

Sibanda confirmed meeting MTN executives. He, however, said MTN might not be happy with disclosures at this stage.
“They were exploring,” Sibanda told C&M.

“A Zimbabwean in the diaspora introduced them to us,” he added.

“He came here and said how can you be a country without MTN? They are yet to give us a report. We are expecting it in the next few weeks. We organised meetings for them and they were quite happy with the environment,” Sibanda said.

Sibanda, who addressed a tax seminar organised by EY last week, had made reference to MTN while stressing that there were thousands of Zimbabweans in the Diaspora who were tirelessly working to see the southern African country recover from its current economic crisis.

He said apart from remittances that Zimbabweans were receiving from relatives and friends in the Diaspora, many of the country’s nationals were also introducing investors to this market.

There have been fears on the domestic market that MTN’s entrance into Zimbabwe could upset a number of indigenous telecoms investors, but its presence on the local market could help push tariffs down as lack of competition has left millions of subscribers at the mercy of the three operating mobile telecommunication networks. These are Telecel Zimbabwe, NetOne and Econet Wireless Zimbabwe. MTN could mount a serious challenge to Econet Wireless, Zimbabwe’s biggest mobile network which saw its subscriber base soar past nine million in the first quarter of 2014. MTN has 215 million subscribers in 21 countries.

In December, government had to intervene and direct the networks to review prices downwards after it became clear that tariffs in Zimbabwe were among the highest in Africa.
With a massive balance sheet, MTN is a growing multinational company that is seeking to expand its African footprint and expand into the Middle East. The group says on its website that it has a presence in South Africa, Zambia, Botswana, Benin, Cameroon, Cyprus, Yemen, Syria, Uganda, Nigeria, Liberia, Afghanistan, Guinea Bissau and Congo Brazzerville.

MTN, which reported a nine percent rise in 2014 half-year profits, has a plan to boost flagging revenue in South Africa.
The group’s Zimbabwe-born chief executive officer, Sifiso Dabengwa, said then MTN intended to expand its fibre network to the homes of its wealthier South Africa clients during the third quarter of the financial year.
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