ZIMBABWE'S TEL*ONE LOOKS SHORT OF CASH AS IT PAYS ONLY USD1 MILLION ON USD168 MILLION CONTRACT WITH HUAWEI

Mergers, Acquisitions and Financial Results

Zimbabwe's sole landline provider Tel*One has paid Chinese telecommunications firm Huawei Technologies close to US$1 million for the supply of equipment to roll out an ambitious five-year development plan. It was heard last week that the equipment would be delivered on pro-rata basis.

However the money is far short of what the landline provider had wanted to meet the requirements signed with Huawei last year. Tel*One entered into a US$68 million telecommunications agreement with Huawei Technologies last year whereby the Chinese firm would supply telecommunications equipment. The deal was envisaged to result in the provision of 1,4 million new lines.

The first phase, valued at US$28,9 million was scheduled to be completed by the end of March. The first phase will open up 80 000 lines and the installation of 50 base stations countrywide. The second phase will result in 230,000 lines and 102 base stations being set up.

Tel*One MD Wellington Makamure told said that the target they had set out had now shifted as the landline provider had failed to raise adequate foreign currency. Makamure said: "To be honest with you our targets have shifted because of foreign currency shortages."

The Tel*One boss said the equipment ordered will be delivered "by the end of August or early September". Makamure said the landline provider had made $8 billion worth of investments into cotton to augment the foreign currency Tel*One gets from the Reserve Bank of Zimbabwe.

Under the arrangement Tel*One investments in cotton are guaranteed by commercial banks and ratified by the central bank. The venture is funded in local currency and proceeds will be used to finance the roll out of the project. Makamure said Tel*One was also exploring ways of investing in horticulture and tobacco.

Tel*One is currently undergoing restructuring and commercialisation ahead of privatisation which was shelved some years ago. Established in 1988, Huawei is one of the fastest growing telecommunications equipment manufacturers in China. The company has also signed an agreement for the supply of equipment to Net*One as part of the government's "Look East" policy.

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