HARARE: Zimbabwe’s largest telecommunications firm, Econet Wireless, will get at least $300 million out of a $500 million loan facility extended to the group by the China Development Bank and Sino equipment vendor ZTE, the company announced on Friday. The loan is set to push Econet’s total investment in Zimbabwe above $1.5 billion since it began operating in 1998.
The $500 million loan, negotiated by Econet Global, was announced in South Africa during Chinese President Xi Jinping’s ongoing visit to South Africa. Xi left Zimbabwe after a two-day state visit on Tuesday, having signed energy and telecommunications deals worth about $1.1 billion with President Robert Mugabe’s government.
Econet Wireless Zimbabwe chief executive Douglas Mboweni said the loan had been negotiated by Econet Global, which he said had the requisite expertise to raise the significant amounts involved. The capital injection would help Econet introduce new services and cement its market position, where its more than 8 million subscribers give it a market share in excess of 60 percent.
In 2012, the Econet Wireless Group sewed up a $362 million loan facility arranged by AfriEximbank, with the participation of development and financial institutions from Germany (Deutsche Investitions-und Entwicklungsgesellschaft mbH [DEG]), France (Societe De Promotion Et De Participation Pour La Cooperation Economique (PROPARCO), China (China Development Bank Corporation [CDB]), the Netherlands (Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. [FMO]), South Africa (Industrial Development Corporation of South Africa [IDC]), and Sweden (Exportkreditnämnden [EKN]).
The Zimbabwean unit got $307 million of the 2012 facility, $255 million being committed to re-financing existing short-term facilities and $52 million going to equipment purchases for the firm’s network expansion programme.
In October, Econet Wireless Zimbabwe reported a 52 percent decline in its half-year after-tax-profit to $23 million for the six months to August on weak demand and the effects of a government-sanctioned voice tariff cut and taxes on airtime sales and mobile handsets. Revenue for the six months declined by 18 percent to $323 million.
Government taxes — a five percent excise duty on airtime sales, a 25 percent duty on handsets, and a five cents levy per transaction on mobile money transfers — compounded by a 35 percent voice tariff reduction effected last year has hit the telecommunication sector hard.
