Econet expands into Malawi

SA-based Econet Wireless has acquired 60% of Telekom Networks Malawi (TNM), a subsidiary of Telekom Malaysia Berhad (TM).

TM says Econet will acquire the stake by buying 100% of Tess International, a TM subsidiary set up as part of a restructure to hold its interest in TNM.

"The sale has great economic potential," says Sure Kamhunga, head of group media relations for Econet Wireless, who says TNM has over 150 000 subscribers and a market share of 45%. Its largest competitor, Celtel, has 200 000 subscribers.

Kamhunga says the US $24.5 million deal is seen as a worthwhile investment since Malawi`s population and subscriber numbers are growing exponentially.

"A comprehensive business plan has already been implemented to increase subscriber numbers and network capacity."

Kamhunga describes the TNM deal as a "brilliant move for Econet in terms of competition. We were keen to buy TNM because the investments fits in with our strategy of becoming one of Africa`s top five telecoms companies. Naturally, we intend investing significant amounts of money to further expand and grow the business, and meet rising demand for telecommunication services in Malawi.

"The acquisition is part of our ongoing strategy to expand in selected emerging markets. Our strategy in Malawi would be no different from what we implement in other countries, which is mainly to rapidly grow and gain market share and become a dominant player in Malawi."

Econet Wireless group CEO Strive Masiyiwa said recently that Econet`s acquisition of the controlling stake in TNM would strengthen the group`s position in a region in which it already has a number of operations. The group has African offices and operations in Botswana, Lesotho, Kenya, Nigeria and Zimbabwe.

"The company is definitely on the look out for more acquisitions across Africa. We are excited about the future and believe we have the expertise to not only compete with other players but also carve and protect our own niche in the telecommunications market on the continent," says Kamhunga.

"As previously announced, we are pursuing alternative options to raise additional capital for new and existing projects, and this could include a possible listing in the UK, details of which will be released if and when there are material developments to report."

Telekom Malaysia CEO Yusof Annuar Yaacob says there were a number of reasons for the withdrawal of TM`s stakes in Malawi. The first was the sale of its business in SA, which was initiated by business partner SBC.

After the withdrawal from SA, there was arbitration against the company in Ghana by the government, which forced it to sell. With SA and Ghana out of the picture, there was a considerable dent in African investment, as TM only had stakes left in Malawi and Guinea.

"Leaving Africa was mainly a decision related to our need to refocus our attention closer to home," says Yaacob, who is adamant that the departure of TM does not reflect Africa as an investment disaster.