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Mobile phone boom eludes Zimbabwe as crisis bites
MacDonald Dzirutwe, Reuters
June 26, 2006

http://today.reuters.co.uk/news/newsArticle.aspx?type=internetNews&storyID=2006-06-26

HARARE (Reuters) - It is a cold winter night in central Harare, but 100 people are willing to queue on the pavement until the shops open in the morning.

The glittering prize? A mobile phone SIM card.

"I had no choice, this was the only way of securing a SIM card at a reasonable price," said Sam Takavada, emerging from a local dealer for Zimbabwe's largest mobile phone operator, Econet, after a night in the queue.

Takavada considers himself lucky after paying 3 million Zimbabwe dollars (17 pounds) for a pay-as-you-go card that will link him to a mobile phone network and comes with airtime. Most are forced to buy SIM cards on a thriving black market, where prices climb to 25 million Zimbabwe dollars.

Zimbabwe offers a sharp contrast to the rest of Africa, where mobile phone use is spreading rapidly as an alternative to unreliable and expensive fixed lines.

But foreign currency shortages have hamstrung network expansion and growth in Zimbabwe's mobile phone sector, capping penetration at around 5 percent of the population, compared to 70 percent in South Africa or around 40 percent in Namibia.

Middle Eastern, South African and European firms are scrambling for a foothold on the rest of continent, with South Africa's MTN recently offering $5.53 billion for Dubai-based Investcom.

But Zimbabwe, crippled by economic crisis, is different. The country has three mobile operators, Econet Wireless, state-owned Net*One and Telecel Zimbabwe, majority-owned by Orascom Telecom's Telecel International.

The government has failed to attract foreign investors to pump money into debt-saddled Net*One and fixed-line operator TelOne.

Dakarayi Matanga, spokesman at Econet Wireless, Zimbabwe's biggest cellphone operator, said about 95 percent of the company's key components were sourced abroad.

"Therefore any significant network expansion can only take place if and when the company can access enough hard currency to import network equipment," he said.

In the last five years, Zimbabwe has witnessed a rise in black market trading across all sectors of the economy as many struggle to eke out a living in a country grappling with its worst economic crisis since independence from Britain in 1980.

Inflation exceeds 1,000 percent, the highest in the world, unemployment has topped 70 percent and the national currency is losing value faster than any other.

Newspaper classified sections are packed with advertisements from unlicensed dealers offering mobile phone lines that are unavailable from operators or their dealers.

Speculators buy lines when they are released by the three mobile phone operators and resell them at anything from 15 to 25 million Zimbabwe dollars on the black market.

"It is a little easier when you have contacts at these companies because you can get a large order for SIM cards ... since we are not dealers for any of the companies we do not have restrictions on the price mark-up," said Justin Marowa, a manager at Cell Link, which sells cellphones and accessories.

"Now people say lines are expensive but there will always be someone who is willing to buy it for 25 million (Zimbabwe) dollars," he added.

Unlike in neighbouring South Africa, Botswana or Namibia where a customer buys a SIM card over the counter, Zimbabweans have to wait for months before SIM cards come on the market, always resulting in a stampede.

Most of Zimbabwe's users are on the pay-as-you-go system, too poor to qualify for contract services.

Econet has the most subscribers at 412,197 and hopes to increase the figure to 500,000 by the end of this month. Net*One has 240,000 while Telecel Zimbabwe has fewer than 140,000 users.

Net*One Chief Executive Reward Kangai said recently his company was planning to expand the network and hoped new lines would be available soon, but analysts doubt it will be able to meet huge pent-up demand from Zimbabweans.

"The year 2006 comes with a lot of promise for all customers ... potential customers should also look forward to the release of lines which should fulfil demand," he said. 

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