Categories: Stories

Econet Global gets $500 million Chinese loan facility

Zimbabwe’s largest telecommunications firm, Econet Wireless, will get at least $300 million out of a $500 million loan facility extended to the group by the China Development Bank and Sino equipment vendor ZTE, the company announced today.

The loan is set to push Econet’s total investment in Zimbabwe above $1.5 billion since it began operating in 1998.

The $500 million loan, negotiated by Econet Global, was announced in South Africa during Chinese President Xi Jinping’s ongoing visit to South Africa. Xi left Zimbabwe after a two-day state visit on Tuesday, having signed energy and telecommunications deals worth about $1.1 billion with President Robert Mugabe’s government.

Econet Wireless Zimbabwe chief executive Douglas Mboweni said the loan had been negotiated by Econet Global, which he said had the requisite expertise to raise the significant amounts involved. The capital injection would help Econet introduce new services and cement its market position, where its more than 8 million subscribers give it a market share in excess of 60 percent.

In 2012, the Econet Wireless Group sewed up a $362 million loan facility arranged by AfriEximbank, with the participation of development and financial institutions from Germany (Deutsche Investitions-und Entwicklungsgesellschaft mbH [DEG]), France (Societe De Promotion Et De Participation Pour La Cooperation Economique (PROPARCO), China (China Development Bank Corporation [CDB]), the Netherlands (Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. [FMO]), South Africa (Industrial Development Corporation of South Africa [IDC]), and Sweden (Exportkreditnämnden [EKN]).

The Zimbabwean unit got $307 million of the 2012 facility, $255 million being committed to re-financing existing short-term facilities and $52 million going to equipment purchases for the firm’s network expansion programme.

In October, Econet Wireless Zimbabwe reported a 52 percent decline in its half-year after-tax-profit to $23 million for the six months to August on weak demand and the effects of a government-sanctioned voice tariff cut and taxes on airtime sales and mobile handsets. Revenue for the six months declined by 18 percent to $323 million.

Government taxes — a five percent excise duty on airtime sales, a 25 percent duty on handsets, and a five cents levy per transaction on mobile money transfers — compounded by a 35 percent voice tariff reduction effected last year has hit the telecommunication sector hard.-The Source

(98 VIEWS)

This post was last modified on %s = human-readable time difference 5:49 pm

Charles Rukuni

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

Recent Posts

Can the ZiG sustain its rally against the US dollar?

Zimbabwe’s battered currency, the Zimbabwe Gold, which was under attack until the central bank devalued…

November 10, 2024

Will Mnangagwa go against the trend in the region?

Plans by the ruling Zimbabwe African National Union-Patriotic Front to push President Emmerson Mnangagwa to…

October 22, 2024

The Zimbabwe government and not saboteurs sabotaging ZiG

The Zimbabwe government’s insatiable demand for money to satisfy its own needs, which has exceeded…

October 20, 2024

The Zimbabwe Gold will regain its value if the government does this…

Economist Eddie Cross says the Zimbabwe Gold (ZiG) will regain its value if the government…

October 16, 2024

Is Harare the least democratic province in Zimbabwe?

Zimbabwe’s capital, Harare, which is a metropolitan province, is the least democratic province in the…

October 11, 2024

Zimbabweans against extension of presidential term in office

Nearly 80% of Zimbabweans are against the extension of the president’s term in office, according…

October 11, 2024