New Reports Synopsis: Zimbabwe 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. TABLE OF CONTENTS: Investment Opportunities in the ICT Sector in Zimbabwe: 2010 EXECUTIVE SUMMARY I INTRODUCTION 1 BACKGROUND 1 OBJECTIVES OF THE STUDY 2 RESEARCH METHODOLOGY 3 A NOTE ON FORECASTS 3 CURRENCY 4 ACKNOWLEDGEMENTS 4 INVESTMENT OPPORTUNITIES IN THE ICT SECTOR IN ZIMBABWE 6 RATIONALE FOR SELECTING ZIMBABWE 7 A DECADE OF DECLINE 7 A BRIGHTER FUTURE? 9 ICT’S IN ZIMBABWE 13 THE FIXED LINE MARKET 15 THE MOBILE MARKET 16 INTERNET 18 CHALLENGES IN ZIMBABWEAN ICT MARKETS 21 KEY PLAYERS 22 TELONE 22 NETONE 22 ECONET WIRELESS (PVT) LTD 23 TELECEL 24 BROADLANDS NETWORKS 26 REGULATORY CONTEXT AND PROGNOSIS 26 OVERVIEW OF ICT LEGISLATION 26 LICENSING FRAMEWORK 27 THE NEW ICT BILL AND THE WAY FORWARD 28 INVESTMENT ENVIRONMENT 30 FOREIGN INVESTMENT 30 BANKING SECTOR 31 PRIVATE EQUITY 31 INVESTMENT PROSPECTS 33 MARKET GROWTH PROSPECTS AND FORECAST 33 MOBILE OPERATOR INVESTMENTS 35 INVESTMENT OPPORTUNITIES IN THE BACKBONE NETWORK 36 OTHER INVESTMENT OPPORTUNITIES 36 INVESTMENT IN ZIMBABWE IN PERSPECTIVE 37 APPENDIX 1: KEY CONTACTS A-1 LIST OF FIGURES ZIMBABWE: REAL ANNUAL GDP GROWTH RATE 8 ZIMBABWEAN DOLLAR EXCHANGE RATE TO THE USD 9 TELEDENSITY IN AFRICA (ZIMBABWE) 14 ZIMBABWE: FIXED LINES IN SERVICES (2000 – 2009) 15 ZIMBABWE: MOBILE SUBSCRIBERS (2000 – 2009) 17 ZIMBABWE: MOBILE MARKET SHARES BY SERVICE PROVIDER 18 ZIMBABWE: INTERNET USERS (2000 – 2009) 19 ZIMBABWE: FIXED LINE FORECAST (2000 – 2014) 34 ZIMBABWE: MOBILE SUBSCRIBER FORECAST (2000 – 2014) 34 ZIMBABWE: INTERNET USAGE FORECAST (2000 – 2014) 35 LIST OF TABLES ZIMBABWE: KEY STATISTICS 7 ICT USAGE IN ZIMBABWE (2008) 13 ECONET WIRELESS STATISTICS 24 TELECEL GLOBE STATISTICS 25 LICENSE FEES BY CLASS OF LICENSE 28 ZIMBABWE FINANCIAL INSTITUTIONS 31 INVESTMENT COMPANIES AND FUNDS ACTIVE IN ZIMBABWE AND SUB-SAHARAN AFRICA 32 © BroadGroup TMT Ventures and Technology Strategies International Report Price: GBP 895 SINGLE / 995 CORPORATE Order   New Report – Investment Opportunities in the ICT Sector in Africa – 2010   Investment Opportunities in the ICT Sector in Ethiopia   Investment Opportunities in the ICT Sector in Nigeria   Investment Opportunities in the ICT Sector in Zimbabwe   Syrian 3rd Mobile Licence   Privatisation of Nitel   Privatisation of Zamtel   Mozambique third mobile licence