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Zimbabwe cell phone boom still can't beat investor fears
AFP News
September 29, 2010

Zimbabwe cell phone subscribers have increased four-fold since a unity government took office last year, but local firms say they battle to attract investors who worry the political truce won't last.

In 2008, when the local currency was ravaged by world-record hyperinflation, SIM cards were selling for up to 220 US dollars -- not including a phone.

The lucky, and wealthy, few who could afford cell phones were routinely greeted with messages such as "The number you have dialed is not reachable, please try later" or "The number you dialed does not exist."

Then the local currency was abandoned and the unity government took office in February 2009, and the price for a SIM card fell to one dollar.

Even in a country where per capita GDP is just 160 dollars, and unemployment is estimated at over 90 percent, people have snapped up phones.

Forty nine percent of the nation's 12 million people now have a cell phone, up from nine percent 17 months ago, according to government data -- making one telecoms of the few industries to rebound strongly after a decade of economic freefall.

Zimbabwe has three mobile operators, but Econet Wireless controls 73 percent of the market and has dramatically upgraded its network, using earnings from its operations on the rest of the continent.

When Econet unveiled its 3G network a year ago, lines snaked through the streets as people rushed to spend 100 dollars for the service.

Econet CEO Douglas Mboweni believes telecoms in Zimbabwe still have room to grow.

"With a mobile penetration rate of 40 percent, there is still a significant demand for communication services in Zimbabwe," Mboweni said in a circular to shareholders.

But investors are still reluctant to enter the market, as long-ruling President Robert Mugabe and his rival Prime Minister Morgan Tsvangirai feud over political posts and begin to mull elections in the next year or two.

Political risks only add to difficulties of investing in Zimbabwe, which ranks 159 out of 183 countries in the World Bank's ease of doing business index.

While Econet has expanded rapidly, state-owned operator Net One has battled to find investors to upgrade its systems.

"This is a vibrant market, but the problem is that investors always want to buy our companies at a discounted prices because of perceived risk and they want to use this as a discount to get our assets at a lower value," Net One managing director Reward Kangai told AFP.

Zimbabwe's government is spending 6.2 million dollars to link Zimbabwe to fibre-optic cables running under the sea on both the Atlantic and Indian coasts of Africa.

Technology minister Nelson Chamisa says the link will improve both phone and Internet services for fixed lines and mobile phones, which he hopes will help lure investors.

"This is the best time to enter the market because we are a virgin market, there is huge potential," Chamisa told AFP.

"We are inviting investors to launch Internet, mobile connectivity here despite the 'so-called fears'. We need investors."

Government has also removed import duty on all mobile phone and computers, hoping to promote investment in technology.

Aimable Mpore, chief executive offer of Telecel, the second largest mobile operator, said he believed links to the undersea cables will change the market.

"Zimbabwe has been starved (of fast connectivity) but it's coming," he said.

"The sector has recorded growth over the past two years due to dollarisation. Before that operators could not buy equipment like base stations and other things we use."

"Even in stable economies there are risks," he added.

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