The annual report released this past weekend by Masawara also had details of the financial performance of one other internet provider which Masawara has shareholding in; iWayAfrica Zimbabwe. The iWay business also made losses in the year ending 31 December 2012 albeit much lower than uMAX. The internet provider, which is 15.03% owned by Masawara, incurred a loss of US $55,709. Masawara’s share of that loss is just $8,000.
The report says iWayAfrica has been focused on cost containment measures and growing revenues.
iWayAfrica is the former Mweb Zimbabwe business renamed after it was acquired by South Africa’s Telkom Group in 2010. Africa Online, another local internet service provider, was also acquired by Telko at the same time and was supposed to be merged with Mweb Zimbabwe. We have observed however that iWayZim continues to operate separately.
In terms of the business conditions that resulted in the losses, we don’t imagine the situation is any better at most other Internet Service Providers and Internet Access Providers (especially those formed in recent years). They are all are in a highly competitive market where a rapid increase in the penetration of mobile broadband driven by Econet, Telecel and NetOne has provided alternative connectivity at a much lower setup cost (basically mobile phones & cheap dongles) and much wider coverage.
The fixed broadband providers have the huge disadvantage of unattractively high setup costs which most middle to low income consumers cannot afford. They also cannot scale their networks to cover wide areas as fast and at a cost as low as the mobile operators who have the advantage of leveraging existing voice passive infrastructure.
You can download and read the full report here.