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Government Plans To Make TelOne Manufacture Computers And Other Gadgets, Very Bad Idea

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PC Hardware

So, the Zimbabwe Transitional Stabilisation Programme which was launched by Mthuli Ncube last Friday has an interesting piece of detail tucked away in the appendices. In a table that is titled, Compendium of Infrastructure Projects there is a section for ICT projects which has a subsection dedicated to TelOne which is under the heading, TelOne Upgrading Programme. Under that, there is an item whose description says:

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Assembly and Distribution of Digital ICT Gadgets

The project scope is defined as:

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Local manufacturing of ICT equipment such as computers

The project did not have any milestones associated with it up to year 2020 as other projects (but not all) have. The estimated total cost is $6 million and the project is expected to be financed through loans with the government itself putting in $2 million in 2019 and $1 million in 2020.

First, not a bad idea for gadgets to be assembled in Zimbabwe

There is no reason why a local company should not assemble or manufacture computer equipment. We have the human capital to pull it off, hack we have the silicon to build some of the components. More than that the market for low cost generic computer equipment and mobile devices exists on the African continent and it is a growing market.

That company should not be TelOne

Besides TelOne being fully owned by the government, I am quite bullish about the company and I think if they continue on the trajectory they are on they will become one of the most successful companies in Zimbabwe.

TelOne is a services company that has never ventured into hardware. Hardware manufacture is not an obvious industry. Global giants like Amazon and Microsoft attempted to get into hardware and they have scars to show for it even now.

Yes Amazon has the Kindle and is now manufacturing the Echo and they recently announced plans to manufacture stuff like toasters and stuff to build their voice assistant into these products. These are more of home electrical goods which are commodities in the strict sense of the word.

Computer equipment is a different story. It requires a lot of focus because of that integration of hardware and software and the margins are thin unless you are Apple and we all know no one is. Samsung besides being one of the biggest manufacturers of mobile phones does not see much profit from that line of their business.

This is not the time to burden TelOne with a totally different business vertical that will result in them running into more debt than the paltry $6 million that has been put down as the total project cost. This is as if TelOne is not battling a huge debt as it is and as if TelOne does not need more capital for their current business.

The opportunities before TelOne in their traditional business are huge: the home and office demand for internet connectivity, the space of video content they have just entered, cloud solutions for which they already have data centres and need to build more. They should be left to focus on this space, it should keep them busy for a very long time.

Future growth

Of course TelOne cannot just be happy with the opportunity that is currently visible, they need to look for other areas of growth. Such areas should not be orthogonal to their orientation as a services company though particularly the very hard hardware space.

There are still a lot of opportunities to emerge as we move into ‘Everything As A Service.’ These are the opportunities TelOne should be exploring. They should be scouting the startup universe for collaborations and potential acquisitions. Assembling computers is a pipe dream and they should spit it out immediately.

TelOneMthuli Ncube

TelOne is one of the several Telecoms companies operating in the Zimbabwean telecommunications and technology industry. Its main core business revolves around voice, data and internet products and services. "TelOne owns a wide range of telecommunications equipment, varying from various exchanges located in strategic areas,... Read More About TelOne

Professor Mthuli Ncube is the Minister of Finance and Economic Development.He was the Chief Economist and Vice President of the African Development Bank ,financial, economics, investment, and public policy expert, entrepreneur and academic. Professor Ncube divides his time between the private sector in Switzerland and... Read More About Mthuli Ncube

2 thoughts on “Government Plans To Make TelOne Manufacture Computers And Other Gadgets, Very Bad Idea

  1. Telone does have a history of manufacturing some hardware. They used to design and manufacture their own party-line equipment from scratch in Masasa. The question should be whether they are creating their own new brand or they are going to manufacture on behalf of some strong brand such as HP, Linovo etc. A brand new brand could be quit a bit of a task to get the sales to rise as rapidly as required to stay in business.

    1. I must admit I wasn’t aweare of the manufacturing though.

      You are right even so, this experience will not give them much advantage in the consumer gadgets market. I still admit that they should stick to services. There is still a lot of room for growth there. Assembling of gadgets will take them of course

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