Zimbabwe’s Net*One May Go Public

Telecoms

Net*One, the country's largest mobile phone operator by network coverage and second largest by subscriber base, may list on the local bourse if its shareholder, the government, approves a financing model, which is one of the two options currently on the table.

Information Communications Technology Minister, Nelson Chamisa, says the government plans to re-capitalise Net*One through an initial public offer (IPO) or through a technical partnership arrangement.

Either option would see the government rolling back by up to 60 percent and attracting a substantial equity capital infusion to sustain current operations and finance the company's huge expansion plans.

"Net*One is one of the four parastatals that the government is planning to re-capitalise as soon as possible. We are looking at a number of recapitalisation models," Chamisa said.

"For Net*One, we are looking at either public listing or technical partnership. The more efficient of the two is what we will go for."

Net*One plans to expand its network capacity throughout the country and diversify its operations to data services after applying for an Internet Access Provider licence last year. This requires large-scale investments in communications technology.

Though it looks the cheapest source of huge capital for growth, an IPO, however, presents a pricing dilemma that may run up against the government's goal of re-capitalising its mobile phone operator as share prices are currently too undervalued to support a meaningful cash offer per share.

Under the option, the government will have to appoint an underwriter to decide on the number of shares to issue, the type of share to issue, the offering price and when to bring the deal to the market. The money raised constitutes the issued share capital of the company.

Should this option falter, a partnership deal with leading telecommunications corporations with vast operations in Africa looks set to sail through.

MTN Group, South Africa's largest mobile phone operator, and the United Kingdom's Vodacom are among those that have an interest in buying into the country's three mobile operations.

Financial Gazette