Mergers, Acquisitions and Financial Results

Accounts just filed with the Companies Office show Econet Wireless is under pressure to either front up or give up on its plan to build a mobile phone network.

The Auckland-based subsidiary of the African telco chewed through another $3.6 million of shareholder equity and almost all its cash in the year to June 2004, as its plans to set up a mobile phone network remained in limbo.

Econet Wireless paid the Government $13.2 million in March 2001 for a 20- year licence to radio spectrum suitable for setting up a network. New Zealand director Tex Edwards announced last year that the company would not progress the plan till the regulatory environment improved and mobile number portability - slated for 2007 - was introduced.

The company's accounts, filed late last month, suggest it may not be able to wait that long before deciding on its next move.

The book value of Econet Wireless New Zealand's spectrum licence has depreciated to USD9.9 million, but a more pressing issue is that the company ended the year to June with only $6804 cash in the bank.

A note to the subsidiary's accounts says its directors are aware they do not have overdraft facilities. It says there is "an immediate need to raise cash to fund day-to-day operations of the company and to finance the construction of a telecommunications network".

The subsidiary's parent raised $70 million on December 1 through the sale of a 50 per cent stake in the Zimbabwe-born firm to South African- listed Allied Technologies - a deal which the subsidiary hopes may secure its own future.

Econet Wireless New Zealand says its parent is "reviewing various business plans and proposals" relating to the future of the Kiwi subsidiary.

The Hautaki Trust, the commercial arm of the Maori Spectrum Trust, invested the bulk of a $5 million government grant in the subsidiary in 2000.