EXCLUSIVE INTERVIEW WITH ECONET’S STRIVE MASIYIWA ON AFRICAN TELECOMS OPPORTUNITIES

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Africa has few significant regional players but one of the most interesting is Econet that was started by Zimbabwean Strive Masiwiya. News Update’s Russell Southwood spoke to him recently in Johannesburg about his strategic plans for the company and the telecoms opportunities opening up in Africa.

How did you come to get a mobile franchise in Zimbabwe?

I was naïve to start it. My background is as as a telecoms engineer. I used to work for ZPTC. Then I went into an unrelated engineering business. But I always interested in telecoms so when mobiles began to develop, I thought here’s a chance to get in as an entrepreneur. I did a lot of research and tracked it.

In 1993 I raised money to build a mobile network. I wrote a polite letter to ZPTC (then both incumbent and regulator) saying we’d like to do it with them. They wrote back saying we’re not interested in your proposal. I replied to them saying since you’re not interested, we’re going to go ahead. To which the reply from ZPTC came back, you cannot go ahead because we’re a monopoly.

Our banker had a legal background and he said I’ve checked the Telecoms Act and they don’t. So I asked him so how do we do it? ‘You make an application to the High Court to confirm that they don’t have a monopoly’. It took us five years.

Once we got into the battle, ZPTC appealed to the Government to help them and we began to see the unfortunate side of power. But once I’d started, I couldn’t back out so I stuck it through. At the end of 1997 the licence was issued by the High Court and we went on to build a good business in Zimbabwe.

Funnily enough we built our business in Botswana - Mascom - before Zimbabwe. Mascom was a consortium we set up with Portugal Telecom 4-5 months before Zimbabwe started.

What’s the spread of Econet’s business?

We are active directly with ownership in 7 countries: Lesotho, South Africa, Botswana, Zimbabwe, Nigeria, Morocco, the UK and New Zealand. We own a fixed line business in Lesotho.

Our areas of interest span mobile communications (GSM licences), satellite and the internet.

We are licensed UK satellite operator and we use satellite carriers to secure the business we’re in. We also own Gulfsat Maghreb in Morocco. The satellite companies are very exciting businesses and are amongst our fastest growing companies.

We buy capacity on a number of satellites for the mobile operations and are one of the largest buyers of satellite capacity in Africa. But most importantly, we also sell to third party operators. We are the only independent provider of capacity out of the UK (with a hub in Potters Bar) and a lot of African PTTs come to us for international access. We already are a heavy traffic user therefore we can negotiate better rates. We then build earth stations for our customers.

We sell bandwidth to ISPs and they’re also major clients for us. And then there are the large corporate clients like oil and mining companies.

On the internet side, we own Ecoweb, a Zimbabwean ISP and are active in many other areas. We have a company called World Stream in South Africa that provides internet access for radio stations, acting as a streaming host.

We have a joint venture in Cape Town that deals with bulk SMS traffic for companies like fleet operators. It gives access to people who need to send up to 1 million SMS messages.

I hear you’re going to list on the London Stock Exchange?

Yes, we’re quite advanced with that and we’ll complete this year.

Why have you opened an operation in New Zealand?

(Laughs) I’d like to be in China.

Because it was there?

No, we turn away projects all the time. Initially we said it’s too far but that part of the world has always had an affinity with southern Africa. New Zealand only had one GSM operator so it was a really good opportunity for us. We got an 1800 GSM and 3G licence for a price that would make anyone envious. We had a very, very good partner in the Maori community because it was an empowerment franchise. The New Zealand parliament passed specific legislation to lower the entry price and ensure the incumbent shared infrastructure with us. We see it as a staging post to the east, to places that are very similar to markets we already know like Laos, Cambodia and Vietnam.

You tried to go into Kenya?

We walked away from Kenya and we also walked away from Malawi and Cameroon. It illustrates our approach to business. The money we represent is quite shy and conservative.

The old regime in Kenya was quite extraordinary. There were quite a few ‘firsts’ for us in Kenya. There was a sense of entitlement and they were quite open about it. In the case of another African country we had been negotiating in London (with a partner) with some government officials. Things had been going well. At the end I made a naïve comment. I said I have to take this to my board. They’ll say who are my partners?

The agreement says ‘other’ shareholders have a 40% holding. Who are these others? They said, it’s us. It was them individually, not the Government. We walked away politely.

Are there many opportunities in Africa?

Africa is a buyer’s market. There are almost no countries (except those where we already are) which has not got some opportunity. This has not happened before in this industry. We are now at a healthy stage. I don’t have to pursue countries because almost all already have licences. We can choos which markets we want to be in and will give us the return we want. We don’t have to take everything just because it’s available.

We’re not Pan-Africanists. I’ve too much respect for our continent to talk like that. It’s a huge place. Those who have pursued 14-15 licences on that basis, the ‘wheels have come off’. I would prefer to pursue a good opportunity in Asia than a bad one in Africa.

At the moment we’re more interested in consolidation. We’re growing the revenues of the businesses we already have.

Are you thinking of expanding the internet side?

Where we are now is where we’re most comfortable. We don’t like being an ISP, we don’t like that as a business. We prefer to sell bandwidth. For example we’ve looked at purchasing Africa Online all the way back to the days when it was owned by Prodigy. We always found ourselves saying: how do we build a business case? It’s not possible.

Our route to the internet is via improved technology on our networks. We’re playing with GPRS in Nigeria to see if we can create better internet access. It’s then a revenue add to what we already do.