Econet borrows US$500m for network expansion

Business Reporter

ECONET Wireless Zimbabwe has managed to expand its network to the tune of US$500 million through lines of credit secured from international financial institutions as well as its parent company in South Africa, Econet Wireless Holdings.

The fast growing telecommunications firm seeks to increase its subscriber base from three to five million by June this year as well as upgrade its network.

This was said last week by the company’s chief executive officer, Mr Douglas Mboweni, while giving oral evidence before the Parliamentary Portfolio Committee on Information and Communication Technology chaired by Southerton Member of House of Assembly Mr Gift Chimanikire (MDC-T).

"It is difficult to get lines of credit from investors because they also look at the country’s risk. For a private company it is not easy unless it is a government-to-government agreement. Banks have been advancing our parent company in South Africa, which would subsequently extend to us as we can pledge our assets as security. We have secured US$300 million as lines of credit, but cumulatively we have accessed US$500 million as the other came from our own resources," said Mr Mboweni.

He said some of the questions potential investors asked were issues to do with the legal framework and the certainty of the use of the multi-currency system.

"Investors ask if the legal framework is okay, they ask whether we would not wake up one day with no network, so they want certainty," said Mr Mboweni.

"The funders like the Chinese want to know how long will we be using the United States dollar and we have got an undertaking from the Ministry of Finance assuring that we will use the US dollar for the next three years. We have also told them that by the time the Zimbabwe dollar returns, our economy would have stabilised so much that our currency would be strong."

Mr Mboweni bemoaned power outages, saying they had seriously affected their business. The company has now powered about 50 percent of its base stations with generators to counter the effects of outages, said Mr Mboweni.

He said there was need to have uniform rentals for base stations as some councils were charging exorbitant amounts, a development that has seen the company abandoning their base stations or not setting them up at all in some areas.