Mobile Phone Battle

Published on 26th April 2005

Econet Wireless International, the Zimbabwean-based mobile phone company, came out firing from both barrels after the Kenya government announced it would cancel its license.

In apparent respond to remarks made in Parliament casting doubts on its financial capability and track record in the telecommunication sector in Africa, Econet’s executive director for business development, Mr Zachary Wazara, said significant progress had been made in rolling out a third mobile network in the East African nation of 32 million people, which would be commissioned in the second half of the year.

Wazara, in a strongly worded response, said the mobile company has so far invested $30 million (about Kshs2.25 billion) in Kenya. \"The statement in Parliament was unfortunate because it is not based on any facts regarding our group,” Wazara said in a widely publicized statement. “We have invested over 30 million US dollars in cash in Kenya part of which was applied towards the license fee, with the remainder being used to purchase network equipment.”

Econet’s financial and technical capabilities were thoroughly scrutinized during the bidding stages, he said, and have never been in doubt “otherwise we should not have been granted the license in the first place.”

Econet won the bid for a third mobile operator license last September, but controversy erupted over a shareholding dispute with local investors and one of the losing bidders contested the license in court. Kenya’s Minister for Information, Mr Raphael Tuju, joined the fray and cancelled the license, but the High Court last month ruled in favor of Econet Wireless in what was seen as a score against the establishment.

 It has advertised for jobs in readiness for rolling out, but the government said it would cancel the license, after all, citing Econet’s ‘bad record’ in other countries. “Our track record is evidence enough that we are a serious company that is conscious of its obligations to the government and people of Kenya. We are here to cause the telecommunications revolution which the people of Kenya have been waiting for,\" Wazara said.

He said a team of experts in network construction and development, sales and marketing, customer service and IT has been in Kenya for a couple of weeks working on the roll-out project. \"There is a lot of preparatory ground work which has to be done before customers get connected to any network.

A lot of this work may not be evident but our team has done an incredible amount of work including identification of sites for Econet\'s base stations, putting together the distribution infrastructure of dealers and retailers as well as its administrative processes\" said Wazara. He said that the core network infrastructure was already under construction and that contracts for other network subsystems were already in place.

But the controversy surrounding Econet has dented Kenya’s image as an investment destination, something the government hopes to shed off to attract foreign investors. The CEO said Econet Wireless Kenya continues to face a deliberate campaign of misinformation aimed at tarnishing its reputation and credibility.

He said its record elsewhere was commendable and had been built on the successful business model and value systems developed by a team led by Econet founder Strive Masiyiwa, which have expanded the telecoms company into one of the top five in Africa in a period of less than seven years.

Econet operates telecommunications networks in a number of countries among them Botswana, Lesotho, Nigeria and Zimbabwe. Through Mascom Wireless, Econet is the largest mobile network in Botswana, where the company has achieved the “highest penetration rates ever recorded in Africa.”

The Botswana network was launched in 1998, barely six months after the company was awarded a 15-year license. In Zimbabwe, Econet is also the largest mobile network operator with a market share of over 51% having launched two years after the other two operators. In spite of the rough economic and political conditions that have characterized that nation for the past four years, Econet Zimbabwe has remained highly profitable and continues to grow, its boss said.

The company has a 5% stake in Econet Wireless Nigeria, which is that country\'s second largest mobile operator based on subscriber numbers. The current arbitration proceedings in the West Africa oil-producing country relate to a dispute over the recognition of Econet\'s pre-emptive rights in the company, Wazara said.

Econet also has a successful satellite communications operation based in the UK, which provides data access for operators in 61 countries and over 400 networks worldwide. It also operates a fixed and mobile telecommunication operation in Lesotho together with South Africa\'s Eskom Enterprises. Perhaps it should be given an opportunity to prove its case.


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