ECONET IN Z$200 BILLION EXPANSION PROJECT IN ZIMBABWE
Mobile phone operator Econet Wireless Zimbabwe plans to spend more than ZD200 billion on its largest ever expansion since the network was launched in June 1998, which will result in a doubling of the subscriber base by the end of 2005.
The expansion will be financed from the company's own resources with no recourse to expensive local or foreign borrowing. Announcing the expansion plan, Econet chief executive officer Douglas Mboweni said that the project will be financed by a combination of retained earnings and proceeds from the recent disposal of a 14 percent stake in Botswana-based Mascom Wireless, which was held by Econet's parent, stock-exchange listed Econet Wireless Holdings Ltd. The Mascom sale raised US$14 million, which the Zimbabwean operator is using to import essential network equipment, such as base stations.
Mboweni said that Econet has already acquired 120 base stations, which have been paid for and should be shipped within the next four weeks, when installation will immediately commence. "The equipment from Ericsson will require the company to spend about $1 billion for every new base station. But due to our positive cash flow, we will not have to borrow the funds required to finance this expansion," he said.
"The challenge however would be to continue to carefully manage our cash flow over the next few months as we carry out what we believe is our largest ever expansion project in our history," he said. He said Econet expects to have more than 500 000 subscribers on the network by the end of the year. Currently, the network has over 260 000 customers. Econet also expects to increase the number of pay phones from 3 300 as of December 2004 to over 10 000 by the end of this year, further spreading its reach to those customers who are unable to own a cellphone handset. It is estimated that the pay phones are utilised by more than 350 000 customers every month, and the project, branded Yourfone, has so far created 2 500 direct jobs and thousands more in downstream service sectors.
Meanwhile, Mboweni said the Econet board had approved a conservative dividend policy in a bid to conserve cash needed for the expansion programme. "This has however been mitigated by the share buy-back programme that was approved by shareholders last month and on which we have already spent about $25 billion," he said.