Read time: 3 minutes

Zimbabwe: govt tightens grip on telecoms

By , Journalist
Zimbabwe , 08 Sep 2015

Zimbabwe: govt tightens grip on telecoms

Analysts say the government in Zimbabwe is planning to up its dominance of the country's telecommunications industry and raise competition for private players, led by Econet Wireless.

This week, Zimbabwe announced that Zarnet, a wholly state-owned ICT company, is to buy software and network systems, company Portnet, further entrenching the government's interests in the telecommunications and technology sector.

The country's ICT Minister Supa Mandiwanzira has previously said the government would consider buying Telecel Zimbabwe, which is controlled by VimpelCom.

Analysts at Business Monitor International (BMI) said the potential sale of VimpelCom's stake in Telecel Zimbabwe and the acquisition of Portnet by state-owned Zarnet, "along with new mandatory infrastructure sharing rules, will give the government significant control over the telecoms sector".

The research company has since intensified its "bearish view of the market from a risk/rewards perspective", despite the Zimbabwean market's "underlying potential," according to an overview of the industry for the month of September.

The government of Zimbabwe already controls mobile company, NetOne and the country's fixed phone operator, TelOne. If the acquisition of VimpelCom's stake in Telecel Zimbabwe goes through, the government will have completed its move "on market leader Econet Wireless," says the BMI report released this month.

"The move would therefore consolidate the state's control over the sector and it is difficult to see how effective competition could be maintained," it adds.

Telecel Zimbabwe is fighting for its licence after the government initially terminated it, citing the company's failure to settle licence fees and failing to meet the country's indigenisation policy requirements.

The controversial policy requires that foreign companies have no more than 49% shares in local companies.

"Telecel has been struggling to secure and retain customers in recent quarters. By the end of 2014, it had fallen behind NetOne to become the third largest player on the market, accounting for 18.2% of active subscriptions.

"Econet's unbeatable network coverage - aimed at exploiting untapped opportunities in this far from saturated market - sustains its dominance; however, its founder's increasingly frosty relationship with President Robert Mugabe may not be tolerated for much longer and BMI believes that the state may look to curb Econet's power by combining the three mobile licensees to create a single, stronger player," the analysts at BMI said.

Read more
Daily newsletter