The Telecel side of the story: Indigenisation, Expats & Buying Zimbabwe

Barely seconds after we posted the accusation by Telecel that NetOne won’t share infrastructure, an email from Telecel appeared in our inbox with a press release titled “Telecel MD gives evidence to parliamentary committee” attached.

Telecel has been mainly silent on the issues leveled against them in the past few months but the appearance before the Parliamentary Portfolio Committee on Media, Information and Communication Technology has obviously forced them to come out and speak.

We don’t have record of the actual proceedings but we’re glad this communication is coming direct from Telecel. It reflects clearly the company’s position on a lot of issues. Issues such as: employment of expatriates at the company, procuring from outside Zimbabwe, the Universal Service Fund, Telecel’s contribution to Zim and passive infrastructure sharing amoung other issues.

Here’s the full text of the release:

Eight of the 14 contractors hired by Telecel last year to provide towers, masts and related civil works were local companies, Telecel managing director Aimable Mpore told a parliamentary committee on Thursday (February 24).

Only three of the company’s seven senior managers immediately below the managing director were expatriates. All but one of the expatriates employed by the company were Africans, he told the Parliamentary.

He said expatriate staff were all on fixed term contracts. They were being understudied by Zimbabweans, who were expected to take over from them when their contracts expire.

Apart from the seven senior managers there were more than 18 other managers, all of whom were local, Mr. Mpore said. He said since his appointment the number of Zimbabweans employed at Telecel had almost doubled from 150 to nearly 300.

Mr. Mpore had been invited to give evidence before the committee on the provision of information communication technology services in the country.

Answering questions from members of the committee, Mr. Mpore said Telecel had used local companies as much as possible in the construction of towers after taking into consideration quality standards.

Because it proved impossible to obtain towers locally, due to the capacity problems of local companies, and because a fast roll out was needed, most of the towers were imported from South Africa.

He said most of the equipment that could not be obtained locally for Telecel’s core network, billing, radio and transmission network for both 2G and 3G services was supplied by Chinese companies. Huawei, ZTE, Converse and Nokia-Siemens Networks (NSN) were the major suppliers.

Most, if not all, of the suppliers that had been providing services such as BTS [Base Station] installations, transmission installations, power installations and site acquisitions were local. Four out of the main six vendors who provided power back-up equipment were local.

He said the company intended during 2011 to try to source any rollout materials locally, as long as they met the company’s quality, cost and delivery time requirements.

Asked what benefits Telecel had brought to its customers and ordinary Zimbabweans, Mr. Mpore highlighted Telecel’s drastic reduction in the price of its SIM card. This reduction in price, which had forced competitors to bring their prices down too, had made mobile phone lines affordable for everyone. Telecel’s SIM card is virtually free, at one dollar including one dollar’s worth of ordinary airtime and one dollar’s bonus Telecel to Telecel airtime.

Telecel has also established a mobile banking platform that has the potential to bring large numbers of people who do not currently have access to bank accounts, including people in rural areas without banks, into the banking system.

It has provided its customers with added value through its Mega Juice card, which costs one dollar and has an additional one dollar’s worth of bonus airtime for Telecel to Telecel calls.

It brought down the cost of international calls to 23 major international destinations to the same as the cost of a local call.

It also donates more than US$100 000 a year to homes and centres providing help to the elderly, disabled and needy, as well as supporting citizens of Harare on the cultural scene with its sponsorship of the Harare International Festival of the Arts (HIFA).

As to what the company was doing to comply with Posts and Telecommunications Regulatory Authority (Potraz) and Zimbabwean indigenisation laws  requirements that the company’s foreign shareholding be reduced from 60 percent to 49 percent, Telecel Zimbabwe company secretary Angeline Vere said there was ongoing communication on the issue between the company’s shareholders and the relevant ministries.

She said Telecel had been allowed to continue operating after Potraz had cancelled its license over the shareholding issue in 2007, pending the outcome of an appeal to the then Minister of Transport and Communications.

She said although management could not comment on shareholders’ issues, she could confirm that shareholders had written to the Minister of Transport and Infrastructure Development and the Minister of Indigenisation and Empowerment with proposals for reducing Telecel International’s shareholding.

Telecel Zimbabwe currently has two shareholders, namely Telecel International, which holds 60 percent of the shares, and the Empowerment Corporation, a local consortium which holds 40 percent.

Ms. Winnie Musangeya, the Deputy Chief Technical Officer, in response to a question on whether Telecel was utilising the Universal Services Fund (USF), said Telecel, NetOne, Econet and TelOne had met with Potraz officials to discuss the use of Potraz’s USF, into which the four telecommunications operators pay two percent of their revenue for servicing under-serviced areas where it may not be commercially viable to construct base stations. She said tenders were being invited for eight such sites.

As regards site sharing, Mr. Mpore indicated there was satisfactory cooperation with all but one of the other networks. He said even the collection of interconnector fees from that operator was proving a problem. Potraz had tried to assist in resolving this but without much success.

He also told the committee that Telecel intended to introduce an electronic voucher distribution system for airtime sales. This would do away with the need for recharge cards.

Among the major challenges Telecel faces, Mr. Mpore highlighted power supply problems as a result of load shedding.

On legislation he would like to see introduced to assist the mobile phone networks, he suggested the license fees paid to Potraz, which had been increased to three percent of gross turnover, revert to the previous one-and-a-half percent and that lawful interception equipment, which the networks are expected to install for security reasons but which is expensive, be paid for out of the Universal Services Fund.