Econet Raises Us$15m for Nationwide Expansion Drive in Zimbabwe
Mobile telephone services provider Econet Wireless has raised US$15 million for its nationwide expansion drive aimed at improving service and reducing congestion that has dogged the telecommunications sector. Econet was seeking to raise more than US$20 million for network expansion and has had to float 10 percent of its shares in foreign currency to foreign investors.
Last week, the company's shareholders gave unanimous approval for the company to issue new shares to foreign investors and subsequent to the approval, the company said it had already reached an agreement with a South African institutional investor who will buy new shares for US$15 million. This is the first time the company has raised equity finance by issuing shares to a foreign investor since it was listed in September 1998.
The company says it is finalising the purchase arrangements with the investor. Econet intends to use the proceeds of the sale to help finance its expansion from 800 000 to 1,2 million subscribers. Econet has also secured vendor financing and loans for the rest of the expansion.
Econet Wireless Zimbabwe chief executive Douglas Mboweni said the issuance of new shares to raise foreign currency had become necessary because of the acute shortage of foreign currency in Zimbabwe. "As a company we generate a lot of Zimbabwean dollars, but we cannot obtain foreign currency to pay for equipment.This issuance of shares has allowed us to raise money from our foreign shareholders as well as new investors," he said.