1 August 2012

Zimbabwe: Econet Seeks Govt Help to Recover U.S.$80 Million

ECONET Wirless Zimbabwe has engaged government to recover US$80 million it is owed by TelOne and NetOne in interconnection fees, the company's chief executive officer, Douglas Mboweni, told shareholders at an annual general meeting on Friday.

TelOne, a fixed line telecoms firm and NetOne, a mobile phone operator, are both owned by government.

Mboweni said the two telecommunication companies risk being disconnected if they did not pay up.

"We have engaged government to recover the money owed to us. We have since advised them that it is better for them to pay up than to have disruption in connectivity," Mboweni said.

Interconnection and roaming contributed 15 percent of the group's revenue for the financial year ending February 28 2012. Last year it contributed 17 percent and in 2010 accounted for 22 percent.

Interconnection agreements apply when a telecommunications provider carries traffic of another network and terminates it on its network. The inter connection fee is 7c.

"As we speak, about US$80 million is owed to us by the two companies. They have been collecting the money which is subscribers' money and keeping it for themselves," he said.

In terms of an interconnection agreement between the two telecoms firms, TelOne and NetOne are obliged to pay fees for its traffic that terminates on Econet's network and vice-versa.

Econet is the country's largest mobile telecommunication company by subscribers and earnings.

Airtime and subscriptions accounted for 67 percent of the revenue, while data and small message service (SMS) contributed 13 percent and other sales five percent.

Mboweni said unreliable power supplies had resulted in 72 percent of their base stations running on generators at any given time to ensure that the network is not disrupted.

"If we do not do so there will be very bad connectivity," Mboweni said.

He said Econet was the biggest tax payer in the country, contributing US$400 million to the fiscus.

Mboweni said government needed to speed up the time it takes to approve sites to erect base stations if mobile telecommunications services were to improve and become advanced.

"Site approval takes up to 12 months. This takes us back as far as development is concerned," said Mboweni.

Mboweni said the future would depend on innovation.

"If we cannot be innovative we die. Technology that does not change lives is useless," he said.

He said the group was set to consolidate its market leadership position through value creation and preservation, innovation and continuing to meet customer demands for uncompromised quality and reliability for a unique and compelling service experience.

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