Econet Wireless still whistling in dark for funds

The Government's moves on setting prices for access to rivals' network makes investment 'imminent', says Tex Edwards. Picture / Jeff Brass

Econet Wireless has failed to tie down funding to build a mobile phone network but is burning hundreds of thousands of dollars a month on plans for the network.

Econet, which is a subsidiary of African mobile company Econet Wireless Global, has been trying to build a national 3G mobile network since 2000 to compete with Vodafone and Telecom's networks.

In its annual report to the end of February 2006 Econet Wireless Global said it was confident that more funding would be secured for its subsidiary by June/July this year.

The company announced last month that it had signed a memorandum of understanding with two private equity firms - GEMS in Hong Kong and Communications Venture Partners in Britain.

The companies said they would "consider" a nine-figure equity investment - that is, hundreds of millions of dollars - in Econet Wireless, but the funding was still not in place.

Econet Wireless managing director Tex Edwards said it was spending "several hundred thousands of dollars" a month on radio and transmission planning to build the network.

Econet Wireless accounts show current assets dropped from $237,368 in 2005 to $78,864 this year. Liabilities - including debt owed to its shareholders and trade creditors - jumped from just over $3 million to nearly $5 million, according to its annual report.

Edwards said yesterday he "did not know" whether the debt to shareholders had reduced since February but said the debt to trade creditors had reduced from $335,397 to about $200,000.

In its report to shareholders Deloitte said it had "fundamental uncertainty" about the company's financial position in audits of its annual reports for 2005 and 2006.

Econet Wireless depended on funds from its parent company, and if "support is withdrawn" or "capital is not injected" it might fold, Deloitte said.

Edwards said the company's shareholders had "good capacity" to keep funding Econet Wireless until it received investment from its new equity partners.

"We have the shareholder loans to underwrite the company, we are just now waiting for new investment to come in," said Edwards.

Econet Wireless was "unashamedly" a "loss-making company" because it was in an "embryo project stage", he said.

The company's high liabilities were not material relative to its equity of just over $9 million.

Government moves to investigate setting prices for rivals' access to Vodafone and Telecom's mobile network meant investment from private equity funds was "imminent", said Edwards.