Zimbabwe – the greatest telecom investment opportunity of the decade.
Zimbabwe’s economy has contracted for ten years in a row under a political and economic crisis that sent the local currency exchange rate and annual inflation to unprecedented levels. Despite huge difficulties resulting from this, the country’s telecom industry has done remarkably well throughout the crisis, showing modest subscriber growth and network expansion, supported by some of the most innovative ideas developed by some very smart company leaders.
A power sharing agreement on the political level, although not 100% harmonic, and the ‘dollarisation’ of the economy in early 2009 are now enabling the telecom industry to catch up with those ten lost years. By the end of this year, mobile market penetration is expected to catch up with the regional average and exceed 40%, from only 18% in mid 2009.
The normalisation of Zimbabwe’s economy is reflected in the International Monetary Fund (IMF)’s forecast of continuous GDP growth at 6% p.a. from 2010. A new ICT Bill has been drafted to replace existing outdated legislation.
And there are now opportunities for investors to enter this very lucrative market: The government is planning to privatise up to 60% of the national telco, TelOne and its mobile subsidiary NetOne, either through an initial public offering (IPO) or a strategic partnership with a foreign investor.
A second fixed-line licence is planned, either by resuscitating a previously licensed entity that failed during the crisis, or by retendering the licence. In addition, eight companies were licensed in 2009 to provide Voice over Internet Protocol (VoIP) telephony services.
Zimbabwe has one of Africa’s largest Internet user communities, but existing fixed-line infrastructure is limited and broadband bandwidth is scarce and expensive in the landlocked country. The first 3G mobile broadband service in the country was overwhelmed by demand within weeks of the 2009 launch, triggering a fast-track network expansion. Fixed network expansion is also fast-tracked by using fixed-wireless technologies that support 3G broadband services. In addition, several WiMAX wireless broadband services are being rolled out.
International bandwidth will improve dramatically when the several national fibre backbone networks that are currently being rolled out connect to the new international submarine fibre optic cables along the African East coast via neighbouring countries.
For more information, see BuddeComm’s updated report: Zimbabwe – Telecoms, Mobile and Broadband.
