Would Masawara buy Telecel from Vimpelcom?

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A new dimension of a possible buyer emerged today following the talks yesterday between Vimpelcom and the ICT minister to find a solution to the Telecel closure. Apparently Masawara may buy Vimpelcom’s  share in Telecel Zimbabwe. A New Zimbabwe article says government plans to “force” Vimpelcom to sell to Masawara. The article doesn’t say if Masawara would actually be interested in buying a telecoms company. Seeing, we just posted a couple of companies that may be interested in Telecel so we thought we’d just quickly post what we think about Masawara’s chances of being interested.

We think the chances or Masawara wanting to buy into Telecel are slim. Their name may be thrown around yes, but unlike the regular investor, Masawara have learnt a thing or two about the business of telecoms. It is not the money printing machine it’s looked like for years.

We doubt Masawara is ready to get into another Telecoms deal particularly because the Dandemutande investment didn’t pan out like they anticipated. When they got in, we guess like most newbie telecoms investors in this region, they had seen a money printing machine, only to realise telecoms is complex. There’s extremely high gross margin yes, but this misleads some investors into thinking they’ll reap all that margin. Soon enough they realise all the money goes right back into network upgrades as new technologies replace current ones and demand for service quickly outstrips capacity. They also realise how highly competitive the telecoms is as the competition lowers prices far beyond what they expected. Plus government has seen the money and is levying new taxes on service while the regulator insists on slashed tariffs.

If there’s a company that’s learned to be careful about, and probably knows not to expect to reap profits a year, 2 or even 3 into investing a little money buying a telecoms company, it is Masawara. The telecoms industry’s high margins on service are compensated by extra-ordinarily high capital expenditure, and an operator like Telecel, that has not been getting any meaningful investment for network rollout and upgrade these past few  years, will need lots of money and time. Masawara likely has no illusions about this and would not rush into picking up Telecel as blindly some politically connected fellows would.

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6 Comments

  1. Anonymous says:

    Ya true 60% is not a good idea for them. Supa should organise the 40% for Masawara. That will be a good idea.

  2. Observer says:

    These guys are from from the right fit, I mean they are not exactly making waves with Utande!

  3. John says:

    Team Techzim you’re doing a great job of following this story, keep these reports coming. As of right now you are the closest we have to real time updates of the telecel saga.

  4. fidza says:

    ok but politics aside, maybe Supa wants someone indigenous than these Dutch people or maybe he saw Masawara as financially capable or maybe he thought Masawara was better technically to run Telecel….well just maybe.

  5. grass cuter says:

    I heard masawara has retrenched 17 people from dandemutande . Its a sinking ship with their umax brand . So them wanting to buy telecel they will sink even further

  6. grasshunter says:

    I heard masawara retrenched 17 people from dandemutande so i am they are biting the dust in telecom they would want to waste more precious money in telecoms

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