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The government needs Econet to play ball, here’s why

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Econet

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It was interesting to get feedback on my perspective on how Econet is caught in a difficult position with its local management happy with infrastructure sharing while its London shareholder isn’t, and how it had in fact ordered the pull out of discussions with the government.

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As expected, any negative talk on Econet will invite the wrath of its supporters. Nevertheless, with the fear of being labeled a Supa Mandiwanzira protagonist I must touch on one other thing brought up in the Ruvheneko Parirenyatwa interview.

Combining government communications companies creates a monopoly. The Government owns and has interests in several telecoms entities which include Powertel, TelOne, NetOne, ZETDC and Transmedia.

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In summary, Powertel has over 950 km of optical fibre, 3G capable wireless networks and extraterrestrial fibre cable to Seacom via Mozambique. TelOne has some 2,540 km of fibre and descent FTTX complimented by copper to the home with over 300,000 subscribers. This fixed line infrastructure can be easily overhauled to increase the current capacity especially as a last mile alternative to WiFi.

TelOne also has some shareholding, through WIOCC, in the EASSy undersea cable, giving it a direct Africa-Europe-Asia link via WACS,EIG, SAT 3, SAFE, Seacom, Sea-Me-We. It also has a $98 million fibre project underway.

NetOne is the second largest mobile network accounting for 3,1 million subscribers (27% market share). It has some 887 2G and 3G base stations and a $219 million LTE deal underway.

ZETDC Pylons are used by Zimbabwean internet companies to carry fibre as a secure alternative for underground fibre. Transmedia is building a network of 48 sites across Zimbabwe linked first by a satellite uplink then by fibre in the digital migration. It will become one of the largest potential home penetration options in terms of broadband provision.

It’s easy to see that an efficient merging of these companies infrastructure will result in a humongous infrastructure company. We can, for now, put it aside because of “the speed” of setting this up as being a government entity. There is going to be some reasonable effort lost in red tape and bureaucracy.

Capacity unlocked will include multiple channel digital broadcasting, Triple-play services, wider mobile network coverage at higher speeds, higher broadband penetration (Television internet, mobile internet, fibre, VSAT etc) and so forth. Combining these infrastructures will also enable the government to offer telecommunications services at very low prices.

Comparatively, Econet has 3,000 base stations and 65% of the mobile network market share while Liquid has the larger fibre footprint in Zimbabwe with some 6,900 km. It will still be difficult for them to compete against an optimized government infrastructure company.

However, with all this muscle, it will still be difficult for the companies in the Econet group to compete against an optimized government infrastructure company.

It is going to be difficult for the government to disclaim that it will become a monopoly in telecoms with such capacity. Coming in as direct competition to Econet’s dominance will cause serious regulation problems as POTRAZ will constantly be in a catch 22 situation trying to allow cheaper communication on one end, and disallowing monopoly and anti-competition on the other.

Econet may not be able to sustain the pricing regime of the combined state enterprises, the very same way that it is able to offer extended Buddie Zone promotions while Telecel may not be able to.

For that reason, the government would rather have Econet and Liquid in the Infrastructure Sharing agreement so that it can say the duo can also utilize government infrastructure if it wants. The government doesn’t want to be seen to be vengeful and reckless in its approach by “destroying” local investment and it cannot become the same demon it is trying to fight in Econet.

At the same time, it cannot let this opportunity in telecoms go unutilised both for the benefits to the end user, citizens and the control it gives the government in the telecoms sector.

It’s not yer clear whether Econet sees this and whether an anti-competition challenge would hold enough water as a legal challenge to derail not only the infrastructure sharing idea, but the aspect of a government infrastructure company participating in it.


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34 thoughts on “The government needs Econet to play ball, here’s why

  1. If the Govt has the muscle to go it alone, so why try to coax Econet into the deal. They should proceed on their own kkkkk. Everyone knows who is the big brother even if he was sired by the smaller wife kwaaaaaaa

  2. A very objective and thorough analysis here by Victor. It will be interesting to know if Econet will dismantle infrastructure which it installed on Zesa pylons and Telone lines. Will it also dismantle its equipment on Nrz , Telone and Tower lights in the urban areas should it opt out of infrastructure sharing. we all know that Econet has hundreds of base stations on both Tower lights and telone infrastructure. That is hypocrisy on their part considering hey are against infrastructure sharing, but then again i am certain they are uncomfortable with Netone installing its equipment on their sites as it will mean a faster rollout and stiff competition on their part. i am not convinced that they dont want infrastructure sharing but the fact of the matter is that they see themselves as aiding Netone., for example Netone is deploying about 668 new sites and the time frame for lattice tower construction is roughly more than 4 months . these towers added to the already existing towers will give Netone in excess of more than 1300 towers against Econet’s 1400 towers which means they will be on equal footing. if Netone is allowed to lease Econet’s towers they will have aided Netone’s fast broadband rollout particularly LTE broadband and Econet particularly Strive got wind of the implications hence the pullout. Econet wants to maintain its edge because of its infrastructure advantage but the idea of infrastructure sharing has some benefits for them in terms of capital expenditure

    1. You are speculating on why EW pulled out! If NetOne is rolling all that infrastructure, they have budgeted for it and have a road map, why still cry about EW?

      Why is Supa not pushing for TelOne to open adsl chances for other players to get.

      Why cannot he not offer adsl to players like econet who hav the finance to roll out services and remove the monopoly Telone hav?

    2. So technically Econet is already sharing infrastucture with ZESA, NRZ, TelOne and local authorities and on terms they agreed on their own, right? So what is Cde nhingi on and on about?

  3. Charity begins at home! Until Supa(gvt) put its house in order and follow business best practises, there is nothing to talk about.

    All gvt telcos are specialist loss makers hence Mandiwanzira is drulling at Econet cash flows.

    All this talk of merging gvt entities and make big one company is pie in the sky dream. They are run like someone’s little kingdoms.

    One moment Supa was talking of Telecel offering shares to gvt and the next Telecel refuting. Does this shows a gvt or minister who can manage anything??

  4. Supa wants to be seen as doing something fundamental. He is no better than the rest of the crew in this govt and the mafia that’s running parastatls. All froth and form nothing will come out of this apparition!!!!!!!!

  5. Government is not efficient. It would take quadrillion years (not zim dollars :)) to achieve any of the stuff you are dreaming about.

  6. Dude what are you saying.. if the government has such muscle what’s the infrastructure sharing noise all about. Ptc nrz and zesa were there from 1980 almost 20 yrs later an individual comes and builds something bigger than them combined. Even if Econet closes gvt will never make as enough money

  7. Supa is got a good idea and I m pretty sure that the Econet managment know that but you can never deal with the Zanu government. Telone has defaulted payments to Econet and Telecel and Netone too. Our govern is not an entity that can keep their word.

  8. Supa is got a good idea and I m pretty sure that the Econet managment know that but you can never deal with the Zanu government. Telone has defaulted payments to Econet and Telecel and Netone too. Our govern is not an entity that can keep their word. I dont trust the government to work with other companies.

  9. Were u not speculating on why govt wants infrastructure sharing also. Were u not saying that govt players want to ride on Econet’s infrastructure in all your previous postings about infrastructure sharing. Why should i not speculate when Econet was part and parcel of the process of crafting the legislative framework and was even suggesting that towers for sharing must stand on four legs? Why should we not speculate when econet was part and parcell of the whole process only to pull out after the draft was made? We have every reason to speculate as long as Econet itself has not made its reasons known to the public on why it suddenly pulled out. For your own information infrastructure sharing is going to happen whether we like it or not and whether we think it is unfair or not. Just waiting for the gazetting of the regulations very soon and they will be law. Anyone who refuses to share infrastructure without a valid reason will be heavily penalised by potraz. I am glad that sharing will happen coz i see the benefits for me as a consumer. Dont know what will happen to those that doesnt want it to happen coz they feel that Their master has been shortchanged.

    1. Are you new to how our gvt and ministers change laws on the blink of an eye to suit there political agenta?
      One minute its all quite then the next every gvt lapdog is shouting how Masiiwa has instructed EW to pull out, doesnt that looks suspicious to you?
      To me it looks like the gvt and certain individuals have still a bone chew with Strive after they lost court battles. Now this whole infrastructure sharing looks like a way of getting back to him.

      Potraz punishing those who do not follow law! Yeah right!!
      The only telco they can punish is EW, why is Telecel still breaking the law and Potraz always give it more time and space, not punish them?

      Potraz is now a political outfit to raise funds for elections. As we get closer to elections, you will see it more active, punishing EW at every corner because it is the only telco with cash readily available.

      Why is this infrastructure sharing talk about EW only? Why is it quiet on Telone monopoly over landlines?
      Why is Telone not being forced or made away that they need to open their infrastructure to other players?

      Why doesnt gvt cut land rental fees to other telcos like they do to gvt owned ones? Telone, Netone dont pay any land rentals for their towers whereas everyone else does!

      We want a fair beneficial sharing based on principled, sustainable business plan. Why cannt the gvt learn from land reform!! Its a noble idea, but is going to achieve the desired outcome or some people with their own agenta are going to slip in, destroy EW in the hope of starting their own telco business.

  10. Telone made a profit recently and netone also made a profit. So which losses are u talking about now?? U talk about netone having a road map for rollout yes its true but they are constrained in their rollout coz they dont have the financial muscle to quickly construct towers like econet did. Netone needs 728 hops of 200mb/s access microwave in their current expansion. They also need towers for installation of 1668 2g base station consisting of 900mhz and 1800mhz frequency. They also need to stm 64 or 10gig capacity fibre ring in the capital to carry data especially 3g and 4g lte since they are linking many sites . They also need about 175 60 metre towers in the rural areas to add to the 175 already provides by huawei on turnkey basis. U can see that all those are costly elements and as such if infrastructure sharing happens it will mean that they will not have to expend capex in that area and will simply deploy the resources elsewhere. Huge benefits for them actually

    1. But they are never short on getting financial muscle to buy expensive cars for directors and huge salaries.

      Everywhere l have gone asking for jobs and salaries, Netone always tops as the best paying telco but with not large customer base.

      1. Telecel is the one that bought plenty of expensive cars especially the Bt50’s not Netone. EConet was the largest paying telco that is why it could take all Netone and Telecel engineers at will and some of them it deployed to its overseas subsidiaries.

  11. its funny to see some of us frothing blood on their mouths, calm down guys . I think super must do his business one step at a time, and start rolling out late in harare and Bulawayo using powertel and telone fibre. econet has nothing to lose if they share their infrastructure coz thy will b paid for it. I believe the main issue here is about money matters ,Super must hv failed to sweet talk econet about hw thy r gonna deal with defaulters in the future or they failed to agree on sharing fee

  12. Until that law is changed lets just see how it will fare. Econet was never punished and is not being punished at all by Potraz. They were the first to be allocated 3G spectrum in Zim. They are benefiting from Telone’s infrastructure as we speak. As for Netone not paying land rentals its their benefit as a state institution coz the state owns the land. And whoever said the current infrastructure legislation is not fair. Read it and u will see that its fair in every sense. It talks about the one who needs infrastructure approaching the owner and they agree on price and tenure. So what is not fair about that. Its actually Econet and its sympathisers who actually think its is not fair. Its econet’s symphathisers that allow it to shortchange customers by deducting their airtime stealthily. Its econet’s sympathisers that allowed it to claim they had full 3g in harare when it was mostly edge and gprs thereby hoodwinking subscribers. Its econet’s sympathisers that allow it to charge an arm and leg for data and voice coz they want to recoup costs. Last year they even went to court in opposition of a tariff reduction despite the fact that they are the largest telco

    1. Look at all the white paper or policy papers our gvt produce! Can you find any fault in them, recently look at Zimasset!

      They are just that, policies. It is implementation which matters. And show me successful, timely project our gvt have done in IT.

      Why dont we learn from our mistakes!

      1. Lets not talk politics here. Zimasset is a product of the gvt alone whereas infrastructure sharing encompassies all the telecom players whether private or gvt owned. Gvt is only making legislation and the players will agree their own terms.

        1. lm asking one IT project our gvt successfully implemented? Upto now they are still struggling get Zimra ASYCUDA working properly

          1. Isnt econet struggling with its billing system since 2009. Isnt it struggling with data and voice connectivity with three outages in a space of a month. Arent subscribers complaining about dissapearing airtime, unworking ussd platforms and spam messages. So what makes Econet different from the gvt you so despise. How is econet different from zimra that is also having issues? Is econet so special. Arent we hooked on edge and gprs speeds when we claim we have 3g? The largest and most profitable company in southern africa, vodacom is actually sharing infrastructure to reduce capex and opex coz they realise technology is changing fast and ott applications are eating away their revenue. Here u have econet who still believe lattice towers can compete against viber, skype, whatsapp, etc. But then again tough luck to them coz regulations will be enforced soon. Even large telcos in the US and Europe share infrastructure, security costs and co site location. Whats so special about econet that has turned our tower lights into base stations yet they pretend they can go it alone. Sharing benefits all including them. The end result of this will be affordable communication for all. Unfortunately some of us cannot see it.

            1. That is all in writing, not practical side.

              We support sharing and know exactly its benefit which outdo everything you mentioned.

              But sharing being forced by politicians and their political outfit potraz will not benefit the intended people.

              1. Sharing was not forced on anyone. All the operators including Econet were consulted and they were part of the process. Are you saying the Zimbabwean telecomms space should not have a regulator? How political is Potraz and how can you prove its a political outfit. All over the world there are regulatory boadies even in South Africa there is ICASA. I am still adamant sharing whether being enforced by aliens or any other creature on earth will benefit everyone. Besides Potraz who else should regulate the industry? Do u want to see greed and extortion dominate the sector/

  13. “Victor is a guest writer on techzim. He works for the ministry of ICT, in the office of the right Honorable Cde Supa Mandiwanzira. He has a keen interest in seeing Econet give into the demands of the infrastructure sharing policy, and everyone wonders why. For feedback, reach him on his twitter account @SupaCollinsM.
    Ta.”

    And that’s how you should sign out buddy.

  14. After all, that same Govt of your that so want to make noise over is still the one at whose hands the national carrier Airzim is as grounded as a rock. The one in charge of NRZ. Of ZESA which we all know has been doing such a great job providing darkness to the masses. Of run down hospitals. Of a corrupt Police Force that gets rich from the streets. Of roads filled with potholes, instead they are now roads with patches of Tar.

    Begs the question, this humongous telecoms entity you write so passionately about that is very strategic and powerful, yasiyaneiko nezvimwe zvese izvi zvaparadzwa nemabhururu a Hon Minister Supaman-Diwanzira?

  15. Honestly putting the infrastructure sharing aside most comp in zim want to own the whole cake which works for now as we are a small country. Bt with the price margins reducing reality at some point will force them to reevaluate everything and come to th table for sharing. Omagine a comp trying this in nigeria or sa it wont recoup a cent cz the capex wld be 2high

  16. We never learn do we? Infrastructure sharing or beneficiation are supposed to be business not political decisions? Government should only be concerned with policy issues like what GDP growth rate should we be aiming at and not operational decisions? There should just be no place for politics in business unless we want to copy the Chinese model? If that is the case we should then do the full copying and not piecemeal without strategy?

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