Zimbabwe

Zimbabwe's plans for 5G seen as pie in the sky

Government wants new network next year, but big players unlikely to bite

07 April 2019 - 00:00 By RAY NDLOVU

Zimbabwe is trying to lure investors for an ambitious plan to roll out cutting-edge 5G cellphone networks, but analysts doubt any of the major international players would be interested.
"We are in the process of courting various investors and want to have a competitive process in order to obtain maximum value," finance minister Mthuli Ncube told the Sunday Times this week.
"It is also important to progress towards 5G technology and therefore we need a technology partner with the financial resources."
Africa's largest mobile operator MTN and SA fixed-line operator Telkom are on the Zimbabwean government's radar. An MTN spokesperson declined to comment this week, and said it was speculative that it was eyeing entry into the country, while Telkom said it was in a closed period, and had not received communication from authorities.
The finance minister said last month that he hoped to raise $350m from selling a 60% share in state-owned telecoms networks NetOne and TelOne.
The target is to complete the sale by September, but asked on Friday about progress so far, Ncube would only say "the process is under way".
Last year, TelOne - the sole fixed-line operator in the country - made an $11.8m loss. NetOne made a $10m profit, after it posted a $58m loss in 2017. However, both companies have millions of dollars in shared debt.
Steve Minnaar, an equity analyst at Abax Investment in Cape Town, said that it would make financial sense for a mobile operator such as MTN to expand into adjacent countries while maintaining its base in SA.
"This has not happened as telecoms is still a very heavily-regulated industry.
"Countries do not want their communications infrastructure managed from outside their borders; they want to retain the right and ability to switch off networks," he said.
Governments also wanted to be able to manage pricing plans and user registration, and to intercept calls, he said.
"Likewise, the financial regulators want local investor participation and contribution to local tax base.
"This means that mobile operators achieve relatively few economies of scale from operating in adjacent countries."
He said the decision to enter a country was usually based on a pure financial analysis of the ability to achieve a cash return.
An international operator, if it were considering a presence in Zimbabwe, would have to assess its potential to be the biggest or second-biggest player in the country.
It would take a view on "the currency and economic growth, evaluate the competitive environment for introducing financial and other digital services, the cost of the telecoms licence and availability of spectrum".
Adrian Cloete, portfolio manager at PSG Wealth in Cape Town, said telecoms in Zimbabwe presented very little attraction for giant telecoms firms operating in Africa.
"Zimbabwe has a relatively small population of 15-million people versus a country like Nigeria with 190-million people.
"Zimbabwe also has a low GDP per capita of $1,080 and this is expected to be only $935 per capita by the end of this quarter."
Cloete said currency shortages and the rapidly weakening exchange rate would be a deterrent for any telecomms operator.
"The huge economic challenges Zimbabwe faces will also reduce consumers' disposable income as wages will struggle to keep up with rampant inflation," Cloete said.
"So less income will be available for phone and data usage, which will reduce potential revenue per user in Zimbabwe."
Harare IT specialist Tinashe Nyahasha said the biggest problem for mobile network operators was that the bulk of their costs were external in nature and therefore needed to be settled in US dollars.
"However, the central bank is not giving them any forex allocation. Price increases are the only way out," he said.
Zimbabwe has said it wants to launch a high-speed 5G commercial network next year.
The minister of postal and courier services, Kazembe Kazembe, said last month: "We need to start preparing ourselves because 5G is coming whether we like it or not. Yes, we are still deploying 2G in some areas but we can't stop development."
Network coverage of the country is not yet 100%, with some places still without mobile connectivity.
Baxton Sirewu, director of technical services at the Postal and Telecommunications Regulatory Authority of Zimbabwe, said the authority and the telecommunications ministry were working on a road map for the roll-out of 5G.
"Mobile network operators should now upgrade equipment, or if they purchase new material going forward they should make sure it is compatible," he said...

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