Econet gets USD300m upgrade funds
By Alfonce Mbizwo, Harare, Zimbabwe
Zimbabwe’s Econet Wireless has secured USD307 million from international financiers to further develop its infrastructure, the company said on Thursday.
This would be the largest combined foreign investment into a single company in Zimbabwe since Indian conglomerate Essar announced plans to spend up to USD4 billion after acquiring majority shareholding in the state-owned Zimbabwe Iron and Steel Company (since renamed NewSteel) last year.
The investment also represents a vote of confidence into Econet, says the company.
“This substantial facility is being utilised to further develop network infrastructure and in the development of relevant products and services.
The continued network expansion programme will see Econet connecting more people in more places. It would also allow for a greater number of previously marginalised rural communities to have access to affordable telecommunication solutions,” Econet said.
Econet is already Zimbabwe’s largest mobile network with more than six million subscribers.
It said the funds have been secured from China Development Bank, Afreximbank, IDC South Africa, PTA Bank, DEG KFW Bankegruppe of Germany, FMO Entrepreneurial Bank of Netherlands and France’s PROPARCO.
Douglas Mboweni, CEO of the Zimbabwe business, said only USD52 million of the USD307 million syndicated loan facility is new money, with the remaining USD255 million being used to refinance old debts.
The debts are said to have been acquired during the pre-dollarisation era when loan conditions were generally stringent on Zimbabwean companies.
Financial Director Kris Chirairo told delegates at the Imara Investment Conference in Harare that the facility had given the group an opportunity to access international funding.
The loan facility is coming from 10 institutions namely Afreximbank, TN Bank, CBZ Bank, DEG (Germany) FMO (Netherlands) Proparco (France), PTA Bank, IDC (SA), Ericsson (Sweden) and China Development Bank. The signing ceremony was held in London yesterday.
The tenure was from 3-7 years with the weighted average at 5.95 percent made up of LIBOR plus 5.3 percent.
Zimbabwe abandoned its own worthless currency in February 2008 after inflation hit 500 billion percent and adopted the US dollar, Econet has spent USD160m in capex in 2009, USD270m in 2010 and USD184m last year. Chirairo said this year capex would be in the region of USD150m.
“There will be a decline in capex going forward. You cannot completely do away with it. You might find you need to add one or two micro base stations.”
Chirairo said that it’s too early to talk about the impact of Ecocash on the books after its launch in September last year. Ecocash currently has 1.2 million subscribers.
On the issue of the licence, which expires in July next year, Econet said that there was no risk on the licence renewals.
“Some of the financiers of the facilities approached POTRAZ prior to the signing to get assurance that the licence will be renewed.”
However Chirairo said that he was not sure on the actual numbers (fees) but said: “we hope the fee will be reasonable and affordable to all the players that are involved in the sector.”