1 February 2013

Namibia: Leo Calls China for Help

TELECOM Namibia, the new owner of Leo, plans to invest more than N$400 million in an infrastructure network as part of its strategy to compete "heads-on" with MTC and secure between 35% and 40% of the local mobile telecommunications market.

The company awarded a US$46-million contract to China's ZTE Corporation, a leading telecommunications equipment and network solutions provider globally, Telecom Namibia managing director and Leo chairman Frans Ndoroma said yesterday.

Rebranding Leo is also part of Telecom Namibia's plan to resuscitate the struggling mobile operator. Hopefully it will be third time lucky for the company which started as Cell One in 2007 and was rebranded as Leo two years later.

Leo's makeover will take place in "six months or so", Ndoroma said yesterday.

When their strategy will start paying off, Telecom Namibia doesn't know.

Asked when Leo is expected to start making money, Telecom Namibia chief strategy officer and acting chief executive officer of Leo said: " I can't answer when Leo will be profitable".

Telecom Namibia faced a legal battle with the Communications Regulatory Authority of Namibia (Cran) to buy Leo, but when it finally clinched the deal at the end of last year Leo was haemorrhaging losses of between N$2 million and N$5 million a month.

Leo went for a nominal cash price of N$2, but Telecom Namibia had to pick up the N$240-million tab for the company's mounting debt. In addition, Telecom Namibia had to give Guinea Fowl Investments (GFI) N$96,5 million worth of shares in Powercom, the holding company of Leo. GFI is a joint venture between Investec Bank and Nedbank which bought Powercom when its previous owner, Egypt's Orascom Telecom, pulled out in 2011.

Despite its history, Telecom Namibia is confident that Leo will be able to compete with MTC, which claims to have two million customers, compared to Leo's 270 000.

Key in its arsenal will be fixed mobile convergence (FMC) services and products, made possible by an internet protocol (IP) multimedia system (IMS) core platform. The IMS will be a first for Namibia.

"With this unique platform we will optimise time, resources, and results on all the IP communication services - from fixed and mobile phone calls to internet access, from social networks to email," Ndoroma said.

The system will be faster and allow for integrated tariffs and sales bundles, he said.

"This [mobile telecommunications] market will never be the same again," Ndoroma said.

Klein said Namibians can start expecting new offerings and products from Leo from September.

Telecom Namibia will draw on its cash resources to finance the Leo's turnaround strategy. It also has more than N$200 million available in its listed bond programmes on the Namibian Stock Exchange (NSX). The company will also seek money on other capital markets.

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