A WEEK OF MIXED NEWS FOR ECONET - TWO MONTHS TO PAY LICENCE FEE IN KENYA

Mergers, Acquisitions and Financial Results

Econet is a company about which there is never a shortage of news despite the fact that it is actually one of the smaller regional mobile players. The good news? It has now got a clear run at the third licence in Kenya if it comes up with the money in two weeks. Its operations in Zimbabwe are growing again and showing better profits, even if they are in rather worthless Zimbabwwean dollars. It's also had clearance for a November hearing at the UN arbitration court over its dispute with Vmobile in Nigeria. The bad news? It may decide to forego its 15% share in its Botswana operation.

Third mobile service provider, Econet Kenya, has 60 days to pay up the licence fee or lose it. Last week, Econet formally accepted the license conditions set by the Communications Commission of Kenya (CCK) and agreed pay the license fee amounting to USD25 million within the stipulated period.

In a statement released to media, CCK said Econet had written a letter indicating its readiness to pay the bid price and to work within the conditions and framework agreed with the regulator. Christopher Wambua, the CCK's Public and Media Liaison officer said the regulator had negotiated with Econet and agreed on several working arrangements and modalities of implementation.

He said Econet Wireless had accepted, among others conditions, number-portability, national roaming facility, frequency band allocation and the inter-connection timetable with other operators. The number portability feature will allow subscribers to swap networks without losing their mobile phone numbers. This, he said, would enable Econet subscribers to retain their numbers in the event that they changed networks.

The Commission and the operator also agreed on a framework for the national roaming facility that would enable the mobile operators to re-route calls in areas where there is no network. They also agreed on an inter-connectivity timetable that will involve other operators in the country.

The third mobile operator also agreed with the Commission on matters relating to the frequency band to be allocated to them. Negotiations between Econet Wireless and the commission started in May this year.

At the time, the fate of third cellular phone roll-out appeared to hang on a balance following disagreements between the two key partners, the Kenya National Federation of Co-operatives (KNCF) and Econet Wireless of Zimbabwe over shareholding arrangement in the venture. The dispute saw the KNCF write to the industry regulator objecting to certain clauses in the partnership deal.

They later withdrew their objections to pave way for negotiations between the operator and the commission over the terms of awarding the license with regard to rollout schedule and technical specifications.

In Zimbabwe, Econet Wireless has for the first time in four years reported a 20% subscriber growth to 173,604 during the year to June 30. Sales of new lines are continuing and supply of the company's popular Buddie lines could be available on demand by the end of the year. The company has stepped up investment in network expansion as well as the introduction of new services.

"Although our roll-out of base stations is still lagging behind, capacity of the switching system has been expanded to 400 000 subscribers and with base stations being rolled out we expect to double the subscriber base within 18 months if we continue to access foreign currency from the Reserve Bank's auction system," said Econet boss, Douglas Mboweni.

In terms of financial performance Econet reported that revenue grew by 32% to ZD305 billion in inflation-adjusted terms and operating profit was up by 77% to ZD115 billion. Profit before tax was up 78%, boosted by the first dividend contribution from Mascom Wireless, the Botswana operation in which Econet has a 15% stake.

Its Average Revenue Per User (Arpu), a performance indicator keenly followed by the cellular industry, has also recovered to USD19.60 per subscriber after having fallen to USD5.44 in June last year.

Econet, which only began to pay dividends last June, has announced a dividend of USD8,58 per share, which gives a consolidated dividend position of USD15.93 per share for the year.

Econet Wireless this month resumed full interantional roaming for all its customers after the waiver by the Reserve Bank of Zimbabwe (RBZ) on roaming services.

(SOURCES: East African Standard and Zimbabwe Independent)