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Breaking News: Econet buys Telecel

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econet

econet-wireless-largeVimpelCom, the parent company of Telecel Globe, has just announced via a press release that it has sold all its shareholding in Telecel Globe to Econet Wireless Global for US $65 million. Effectively, the release says, Econet Wireless now owns U-Com (or Leo, what Telecel is called in Burundi) and Telecel Central African Republic.  So yes, the deal does not include Telecel Zimbabwe.

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The release says Vimpelcom had previously agreed to sell Telecel Globe to another company, Niel Telecom, last year but the deal fell through as the purchaser was unable to pay the balance. They had just paid a deposit and apparently struggled to raise the rest of the money.

In as far as Telecel Zimbabwe is concerned, the state of ownership remains Vimpelcom 60% and the local guys, the Empowerment Corporation, 40% the press release paints. It’s not clear though if this is directly a Vimpelcom ownership or via their 51.9% ownership in Global Telecom Holding S.A.E. (formally Orascom)

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In term of what exactly Econet’s $65 million buys: Leo in Burundi has 1.57 million subscribers and Telecel CAR has 400,000 subscribers. Even though Burundi has 1.57 million subscribers, the Average Revenue per User of those subscribers as of the second quarter this year was $3, while that of CAR was higher at $6.

Econet have likely bought the two operations at a discount as the previous buyer was supposed to pay $102 million.  Effectively, Econet the voice and mobile broadband telecoms company is now in 1 more African country (CAR). The company is already in Zimbabwe, Botswana, South Africa, Nigeria, Lesotho and Burundi.

To speculate on why Zimbabwe is not part of the deal, we think its mostly to do with the fact that Telecel Globe doesn’t own the whole company and has a complicated relationship revolving around indigenisation. Econet Zimbabwe could ofcourse buy it since they fulfill the indigenisation requirement but who knows if the 40% shareholders are looking to sell, and if they don’t sell, does Econet want to have them as fellow shareholders. There’s the anti-monopoly angle to think about. Them buying Telecel Zimbabwe would have Econet owning more than 85% subscriber market share.


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45 thoughts on “Breaking News: Econet buys Telecel

  1. It’s good that TELECEL ZIM is currently out of the deal, otherwise that would be bad for competition given Econet’s monopolistic or oligopolistic tendencies and bullish business attitude and its extortive pricing model and its promotions which are almost meaningless. Econet’s impasse with BAZ over the USSD platform and its suggestion to BAZ to build its own mobile network if they don’t want its terms and conditions, its high Ecocash charges, its direction to its Ecocash Agents not to double as Telecash Agents (until RBZ intervened), its inter-connection switching off of NetOne & Telecel, its moving of all post paid clients to prepaid in Nov/Dec 2008 for false reasons, inter-alia, is testimony of the same.

    It’s a pity that though the Econet Zimbabwean entity has made Econet Global what it is today, Econet subscribers in Zimbabwe have not reaped value for money harvests for having propelled Econet to greater international heights.

    As a matter of fact Econet is trying to make as much US dollar hard currency as possible in the Zimbabwean market to finance its international expansion as ZIM is an easy forex source than the other markets. However this submission of mine might need to be taken with a pinch or bag of salt, given that Econet had massively reduced its voice tariffs about 14 months ago, but was ordered by POTRAZ to revert to the higher tariffs.

    Despite the foregoing reservations, I still hold to this hypothesis if not theory, that given that Econet has not offered other more meaningful promotions to its ZIM market like TELECEL & Net One! Further, its price maker or market leader position has even made Telecash charges more or less like Ecocash charges!

  2. you guys next time put correct headlines ,because l had already blown the news on whatsapp groups how shame its going to be for me when the people l was telling finally found out the truth.

  3. Click bait! No matter how you justify that headline, you knew what everyone would think and you went ahead and did it anyway. If you were to argue your side in court, you would win because as you say, Econet did indeed buy “Telecel Comapanies”. But for journalistic intergrity (and yes, I know its a blog), serious fail.

  4. We shouldn’t have to argue about whether techzim is ryt or not. The moment you find even the smallest percentage of debate about your blog, something is wrong. From your track record, i still think you could have found a better more reflective headline. It is a matter of time before you really become mediocre if this trend is justified and is let to continue.

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