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Investment Opportunities in the ICT Sector in Zimbabwe
BroadGroup TMT Ventures, March 2010, Pages: 37
The report provides analysis of Zimbabwe which offers a myriad of investment opportunities in a market that is set to grow very rapidly as the political and economic situation normalizes. Given the low level of market development in Zimbabwe, opportunities exist in all areas of the ICT sector. Analysis includes private equity and banking sectors and Investment funds active in infrastructure and related ICT investing as well as existing telecom players, new entrants and upcoming government and private projects.
Zimbabwe is notorious for breaking all inflation records, shunning the economic wisdom that has developed in the world, and embarking on an aggressive program of land distribution and redistribution of wealth that was euphemistically know as indigenisation. As could be expected, this trajectory was neither politically nor economically sustainable. There are indications that Zimbabwe has reached a turning point in its destiny, with the dollarisation of the economy that followed shortly after the power sharing political agreement. Fixed line penetration has grown at a modest 3% p.a. during the last half of the crisis decade, reaching only 365,400 subscribers at the end of 2009. The size of the mobile subscriber base more than doubled in 2009, approaching 3.9 million subscribers at year end, testament to the renewed faith that mobile operators have in the Zimbabwean economy, and demonstrative of the huge latent demand in the country. Dollarisation has also enabled these investments to be made.
The Government of National Unity is in the process of wrestling with an ICT bill that will seek to clear the way for further investment in the ICT sector in Zimbabwe. In addition, it is looking for a strategic partner for the incumbent state-owned fixed line operator, TelOne, with Telkom South Africa currently conducting due diligence to act in such a capacity. The mobile market is liberalized and NetOne (government-owned), Econet and Telecel are licensed to offer services, with Econet dominating the pack by a wide margin.
The number of fixed line subscribers in Zimbabwe is expected to increase to a modest 468,000 by 2014, representing an annual average growth rate of 5% p.a. over this period. Mobile subscriptions, however, are expected to rocket to 11.3 million over the next five years, an annual average growth rate of almost 24%. Mobile teledensity will approach 95% over this period. The number of internet users is set to increase to almost 3 million.
Given the low level of market development in Zimbabwe, opportunities exist in all areas of the ICT sector. There are a number of public sector and private sector projects underway – and investment proposals being prepared, to improve the fibre optic cable infrastructure in the country, and to connect, over land, to various undersea cable landing stations. Econet and Telecel have both launched major network upgrade and expansion initiatives to cater for the surge in mobile demand. And there is a large opportunity for providing last mile access using different technologies.
Zimbabwe offers a myriad of investment opportunities in a market that is set to grow very rapidly as the political and economic situation normalizes. The risks are likely to be high for the next two years, but there is a great deal of opportunity to earn superior returns as the telecommunications sector in Zimbabwe rebuilds itself to offer better and new services.
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