The Mozambican government and the second mobile phone operator in the country, Vodacom Mocambique (VM), on Wednesday last week finally signed the contract formalising the Vodacom promise to make direct foreign investment of USD567 million in the next ten years.

VM is a joint venture between the South African mobile phone company Vodacom (with 98 per cent of the shares) and Mozambican investors in the company EMOTEL (with two per cent). The public face of EMOTEL is prominent Mozambican businessman, and parliamentary deputy for the ruling Frelimo Party, Hermenegildo Gamito, who becomes chairman of the VM board.

VM will be competing against the country’s pioneer mobile phone company, mCel, which is 100 per cent owned by the Mozambican public sector fixed phone operator, TDM.

Vodacom boasts that it will obtain a 45 per cent share of the market within three years. When AIM asked how he expected to achieve this, Starr said "When we thought about investing in Mozambique, we believed the country had potential, and we have no intention of taking clients from anyone else". "Teledensity will grow, and we think that with it both of us, Vodacom and mCel will grow. That’s why we think we’ll reach a 45 per cent market share in three years", said Starr. Vodacom, he claimed, would have products of interest to "all social strata".

The launch party attracted many of Maputo’s prominent business people - including Nyimpine Chissano, the president’s oldest son, seen effusively embracing the Vodacom executives.

But the South African company will not find the Mozambican market a pushover. mCel has clearly tried to saturate the market, and by mid-November it was boasting that it had 400,000 clients.In other words, pretty well everyone who can afford a mobile phone already has one and has either signed a contract with mCel, or is buying pre-paid mCel cards. These can be purchased for as little as 50,000 meticais (two US dollars).

mCel already covers all Mozambique’s main urban and tourist centres, and the major highways - including deep into South Africa. Vodacom plans to start its operations in the Maputo/Matola complex, the roads to Swaziland and South Africa, parts of the southern province of Gaza (Xai-Xai and Bilene), and the northern city of Nampula.

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