advertisement

No going back on Infrastructure Sharing despite Econet conundrum

Despite the minister’s less than elaborate responses in an interview with Ruvheneko Parirenyatwa on ZiFM, there is no taking away the nobility of Infrastructure Sharing and there can be no going back on it.

Excuse the man’s lack of eloquence in trying to sell a concept that is not easily understood by the generality of Zimbabweans, perhaps even Ruvheneko herself in the interview.

Firstly, the bank analogy given by the minister actually works – The problem with some Zimbabweans is we have a selfish mentality that drives us to be distrustful and skeptic of anything, good or bad.

advertisement

A typical zvangu zvaita, zvangu zviriku-fire (my stuff is sorted, i’m good) mentality. We have become so capitalistic and predatory that we consider profits by any means necessary even where goodwill must prevail. This mentality was born of the 2007 hyper inflationary era and the “money burning” days that made us so self-centered; as the only thing that mattered then was getting yours.

The above reason is why our imported products will come in at markups of 100% even where its not necessary. “Let not your right hand see what your left…”. We have taken this to mean the hand purchases a commodity turns around and inflates the margins and sells it to the left hand even if it means the left hand will remain indebted forever and the liquidity locked in that transaction will kill the whole commodity system.

No, fuel importers will not reduce prices despite global fall in prices per barrel!  No, micro-lenders will not decrease interest rates if no one says anything! Even if the vehicle is already in Zimbabwe, when duty increases, so does the price of the car that’s gathered six months dust in a showroom.

Sometime back, local financial institutions, led by CBZ bank bailed out a local bakery, Lobels, by injecting $4.5 million through Altiwave because the bread maker could not survive its obligations to them.

Another financial institution, FBC Holdings has bailed out Turnall previously and the examples are plenty for one to learn the concept without even going as far as the Greece scenario or the global financial crisis.

The ailing institutions just needed greasing to make their machinery run more efficiently to return to productivity. Real economists see an opportunity that not only benefits them, but sustains the ecosystem. Couldn’t the banks rather invest in some other bakers out of the 250 or so if they really wanted to make bread?

With that analogy, what’s wrong with Econet injecting operational capital into NetOne? Its simple economics, or is the money they are owed worth sacrificing, just so that competition fails.

The minister did not ask Econet to hand out capital investment into competing operators after all. There are several options of resuscitating a whole ecosystem to give relief to other players so that they are more profitable without losing any ground. Even if they were to do that anyway, with the way Econet understands capitalism it would be at exorbitant interest rates.

Which brings me to an observation, a conspiracy theory if you please. Has anyone also wondered as I have where Econet gets its FDI for these huge infrastructure expansion projects? The best guess, from Econet Global, a Masiyiwa company.

Effectively, Strive and company sit and decide that they need money and they all turn to the most liquid of their shareholding – Strive himself.

But Strive’s money is not cheap. Why should it be? Why shouldn’t he sell them a $350 thousand base station for twice as much? After all he is the only one who dares to invest in Zimbabwe. Why shouldn’t he then raise the interest as cushion against the high risks associated with taking a gamble. But that’s just what it is, a gamble. It can go either way.

Of course readers may also want to point out that such transactions are lendings between different companies under different economic jurisdictions. This sort of arrangement actually makes you wonder whether the shareholders are actually voting on these decisions without some undue persuasion. Or are they just happy enough with the profits to turn a blind eye.

Despite the more gracious reasons, this is also why Econet will not benefit from sharing its infrastructure. They got unreasonable loans with harsh terms to develop infrastructure which in turn is paid back by ridiculous tariffs to consumers.

Now, when the time comes to actually audit this infrastructure, it turns out that the base stations they valued at say $750 thousand could have been sourced for half as much if transparency had a part. They are not the only ones, it’s a common practice in Zimbabwean culture pointed out in the introduction.

Recent events seem to suggest that TelOne has joined the fray. They are accused in the press of buying overpriced equipment from Huawei. Thanks to disgruntlement among the ranks caused by the infamous labour ruling (which some believe was woven tactfully to coincide with the IMF staff monitored labour market flexibility restructuring, the result of which is a huge overhaul of labour at no cent in cost to the government) to “regularize” labour are backfiring as staff are spilling anonymous tips on previously ignored misconduct.

The need for an infrastructure audit in the event of infrastructure sharing poses a question that could explain the rift between local Econet management and “Shareholders in London”.

How does Econet tell Strive that an independent inquiry has pegged infrastructure at half the cost they bought it for? How are they supposed to justify that they bought expensive money because there was no control on who you buy from, or at how much you buy for?

Then again it’s just my conspiracy theory.


Quick NetOne, Telecel, Africom, And Econet Airtime Recharge

If anything goes wrong, click here to enter your query.


WhatsApp Discussions

Click to join a Techzim WhatsApp group:
https://chat.whatsapp.com/DKzLTsQPM6SBd0mrKOKPai

If you find the group full, please notify us on +263 715 071 199 and we'll update the link.


33 thoughts on “No going back on Infrastructure Sharing despite Econet conundrum

  1. OK, so Econet are greedy, capitalists, move money around within the group structure by internally purchasing infrastructure and services within the group.

    So there’s some formal channel for capital flight. Meaning more money going out of the country which would’ve been less if the tendering process was open….

    Yes. They may be all that, and we may absolutely hate what they represent, but as long as they work within the confines of the law and have not been found guilty of anything, then they can do so!… unfortunately.

    Infrastructure sharing is good depending on the sentiment behind it, as I have said before. Separating my hatred for Econet’s holier than thou-rip-your-world-mentality, I greatly disagree with what Supa Mandiwanzira believes is the goal behind infrastructure sharing.

    Econet is a profit making entity. Public and self-serving. It is also a market leader. It is only natural that it would want to retain its market-leading position for as long as it can. And has history testifies, Econet will make sure it maximises on profits before it folds back and profits on volumes(vs margins).

    If they want out, that’s fine. They gain nothing from this sharing arrangements, because THEY JUST DONT NEED IT.

    TeleCel, NetOne and any other, have a great deal to gain from it.

    NetOne is riddled with rot, Government interference and mismanagement, yet it has an great advantage of riding on other parastatal/government infrastructure which not even Econet has. The revenue potential for NetOne, TelOne etc is enormous. Instead of Supa Mandiwanzira clamouring for sharing, he would achieve tremendously more, if he worked on NetOne and TelOne working independently from the freebee-demanding-Government and making the profits they are supposed to be making.

    At the end of the day, the question that each asks is… “what’s in it for me?”

    1. What Mandiwanzira like you said must be doing is making sure his MPs and other gvt members pay their bills on time and cut out all the free calling and services they get from Telon, Netone, PowerTel etc.

      They have sucked these telcos dry and now they are looking to do the same to Econet through the infrastructure sharing rubbish.

      What Supa must be doing is work hard to turn gvt telcos into profitable entities.

      1. All historical facts agreed with. But can we live our future on the mistakes of past generations. Yes Netone / Telone bought cars and Econet brought Infrastructure. The current challenges in Telcoms cannot just be left unaddressed because somebody messed up. We have to correct it. Potraz messed up as well in allowing some of these practices to go unchallenged, but it must still be addressed. Basing everything on history is no different from the current scenario where only those with liberation credentials qualify for certain privileges.

        But surely if the government telcos combine into an infrastructure company, their potential is another monopoly, the very same thing they are trying to kill in Econet. Solving a problem by creating another.

        1. at whose expense, bring butter to the table and I bring bread, not that I bring bread and butter and you only bring a plate, aaaaagh please

  2. “….Has anyone also wondered as I have where Econet gets its FDI for these huge infrastructure expansion projects? The best guess, from Econet Global, a Masiyiwa company…”

    Please Kabweza or someone incharge of Techzim do something with this writer! He writes to curry favour!

    If you have been old enough to read Victor, its a well known secret that Econet borrows money from international markets at high interests rates for infrastructure development.

    l will not even bother giving you links since you are a writer for hire to the highest payer!

    There is nothing to wonder, just facts available.

      1. And foreign banks are? What are money markets?

        Wether foreign banks or foreign gvt, Econet did go and look for it not what this miracle guy is trying to imply.

        Why is he trying to cook stories about Econet when facts are a click away!

        It is this misrepresentation of facts which have killed our country, pure lies and speculative agenta to get the attention of those in power.

          1. Victor is not smart. If a loan deal is struck by Strive on behalf of Econet Zim, they he thinks its Strive’s personal money or Econet Global’s money!

            To prove he is dump, he inserts a link alluding to the above!

  3. These companies are neither profitable nor efficient and they are run by greedy pigs who plan on neither and supported by fool like the author who do not understand both

  4. This is utter rubbish, Victor, this no going back for a conspiracy theory? Supa wrote this for you and you put your name on it without reading it or after reading out twice without understanding like you know who? TechnoMag, please do not waste our time, or maybe I should just unsubscribe?

    1. He is copying exactly what Rutsito did, maybe minister vachazomuonawo semupfana aigara achinyora nekumutsigira.

      It is that mentality which some call bootlicking bt l see it as lack of vision and strategy.

      Togoti unofunga chii kana zvese zvangorehwa naminister iwe tande pamusoro pechuru kudeedzera usina kumbotanga wadzamisa pfungwa!

      Kuda zoti mangwana wasangana nayeSupa wofunga kuti uchapihwa cut??

  5. My father (sic) and my elder brother (sic) are based in, say England, and I am here land. I owe my father some moolah but the law says I cannot send the money I owe legally. I generally , and normally, import cellphone equipment and accessories from china. I start importing from my brother in England at double or quadruple the Chinese prices and my brother sources the stuff from China and gives the change to my father. ALL PARTIES SATISFIED! No broken laws – Transfer Pricing!

    1. Exactly Hungwes. Except when the law does eventually require you to provide evidence of how much exactly you bought the equipment for. Which is Econet’s scenario. While it works in your favour thats fine but when your the authorities suddenly realise that your accessories are unusually highly priced they will come after you and if need be they will adjust the laws to make sure the last man, the consumer is protected.

      Should you cry foul then?

  6. Pointless article, why don’t u write something like benefits of infra-sharing coz urikutopeshera butter on top of wht super dd. Honestly infrastructure sharing opens opportunities for som of us ,in other words infra-sharing is meant to benefit end users like u nd I. Some of us must knw our red lines, we dnt even knw y econet chose to pull out of the game. Techzim guys must learn to confim from both parties b4 thy publish their articles or rename yo blog to techzimrumors

  7. The heights by great men reached and kept were not attained by sudden flight; But they, while their companions slept, Were toilling upward in the night. Telone and subsidiaries used to be Post and Telecommunication Corporation, a wholly owned state enterprise enjoying funding from taxpayers in addition to proceeds from its own operations. Then appointments to its Board and Senior Executives assumed political dimensions being done by political figures. Operation efficacy and fiscal base then took a downward spiral as unsound decisions and political influence took toll. All that was taking place while the Masiiwas were taking advantage of the liberalised space and availabl opportunity to develop one of the largest communication entity in the world needless to state; with neither the use of taxpayers’money nor support of government. Then Supa comes along and says lets share. Is he aware that his predecessors harrassed Strive Masiiwa, Nigel Chanakira and James Makamba as they resisted attempts to hand over their projects at the time of establishmen. There has also been mass privatisation of state entities that has paralysed or brought to standstill the operations of those institutions. Infrastrure sharing is good for the subscribers but it must be a project by the owners of those infrastructures on agreed terms not by way of legislation to force compliance. Mandiwanzira must look at ways to recapitalise and enforce good corporate governance in the state owned communication company than invoking strategies that encourage loot and plander of privately owned companies.

    1. These guys need to put a like button in the comments section. Limbikani, please ask this guy to take Victor’s place unless if the controversy he stirs is good for publicity. Beyond that his arguments do not tally with reality.

      1. It would appear like i said before that most people want to base too much on history. Yes the state enterprises were wrong, yes the regulator was sleeping, yes all you purport may be true but we cant deny the need to correct those wrongs and it doesnt have to be at Econet’s cost only. Thats why they have been given an olive branch to participate in formulating the corrective instrument. We cant continue to look at Econet and its services as a justifiable compared to the errors of goverement, when clealry there is middleground. It doesnt have to be left or right only, thats too absolutist.

        1. Hi Victor, although i may have a different view from yours, honestly you have tried to be professional by not bursting due to the feedback like what Kabweza does. Keep it up, looking forward to more of your articles.

        2. Victor you obviously have never partnered with this government and came out on the losing end. These guys are not to be trusted, especially if you are Dangote or you have a dollar to spare

  8. Those who watch the ZSE – have you noticed the >50% tumble of EW share YTD value as of w/e 19/9/2015? It’s not all rosy in the EW camp as many might imagine. The benefit of infra-structure sharing is being lost by many – it is US the end users who will have 100% coverage throughout the country. No mobile opertor has 100% coverage of he country as it is. Whether it is implemented efficiently or professionally is something else. This is the same concept behind Zimswitch with interchange fees and an SLA as control mechanisms.

    1. Shares gain or lose on the basis of investor confidence!

      When you hav a gvt minister attacking EW non stop, and his weird bizness methods being amplified by the like of Victor!

      Do you think investors will look to buy shares or offload shares from EW?

      These are issues Supa must consider before he opens his mouth. Who benefits when EW shares drops!

  9. Guys, lets start a petition to have Victor’s articles removed from Techzim before we lose interest in reading/following these guys. Because it appears he inks before he thinks and all his arguments, Lord they do not convince anyone.

    1. Speak for yourself, Victor has the right to voice an opinion so just provide facts and evidence to support your own opinion

  10. We need more qualified and experienced people to comment around this issue…

    If possible send a team to a country where Infrastructure Sharing has been debated and concluded succesfully.

  11. Econet aim is to maximise shareholders value. hats basic business. The infrastructure sharing being proposed, will lead to a decrease in econet market share and an increase in netone market share. Econet will get small compensation for lost market share. BAD DEAL for Econet.

  12. what is wrong with our leaders? This minister would he allow me to shear studio time from his radio station (private) as an independent radio station operator? I don’t think so. Zveginya chete ndizvo zvavanofunga kuti zvinoita. Myopic thinking that is regressive. No wonder the investors are sitting on the fence on viable projects. Very sad armaturish mindset to the conduct of business.

Comments are closed.