Zimbabwe Parliament Ratifies U.S.$45 Million Loan for NetOne

Mergers, Acquisitions and Financial Results

Last Wednesday Wednesday Zimbabwe’s Parliament ratified a US$45 million loan from the Import Export Bank of China for NetOne's second (2G) and third generation (3G) network rollout project set to transform the information communication technology (ICT) industry in the country through connection of the Zimbabwean optic fibre-network to the undersea cable in the Mozambican channel.

Minister of Finance Tendai Biti moved the motion for the ratification of the loan that was contracted on June 1 in Harare between the government and the Chinese bank. The loan has a grace period of five years during which period only the interest and no principal is payable by the borrower to the lender, and goods, technologies and services to be purchased by the proceeds of the loan should preferably come from China.

Biti urged parliament to ratify the loan saying it was good for the nation which still lags behind in technological advancement when compared to the region and the world. The minister said: "Zimbabwe is 23 years behind in technological infrastructure development. The loan will enable us to increase capacity to move to third and fourth generation phone technology (3G and 4G). The country's use of ICT leaves a lot to be desired. There are only 371,000 fixed telephone lines serving only 3% of the population while only 1.4 million people have access to the Internet. We are ranked 132 out of 135 on the World Economic Forum Global Competitiveness on Report on technology readiness.

The minister reassured parliament that the loan would not be abused as in the past because of the manner in which the agreement was structured. "Huawei Technologies of China will manage and implement the roll out project. This project will have maximum impact on the rural communities. NetOne will only be a partner in the project but will not have direct access to the resources," the minister said.

The loan is also expected to put NetOne on a good footing to compete against its main competitors locally. Econet leads the pack in subscribers with a massive 4.1 million subscribers, followed by Telecel with 1.,27million and lastly NetOne with 1.1 million subscribers.

Biti said the government was considering offers from international companies that were willing to become strategic partners to NetOne when it is finally privatised in the near future. "The cabinet has agreed on privatising state telecoms utility. Privatisation is on course and I cannot mention the potential suitors now suffice to say some big players on the continent are sniffing around," he said.